Buying a new stereo receiver is rarely a simple task. The variety of options is immense. No matter what options you choose, something else will have to be sacrificed. Your best bet is to choose a system that is best for your particular needs.

Movies & Games

Watching movies and playing games is going to require a modern surround sound receiver. While most surround sound systems built in the last 10 years support 5.1 channel sound, that's no longer sufficient. At a bare minimum, you want a system that has digital optical inputs and outputs, and a 7.1 channel speaker setup (two front, two side, two rear speakers and a sub-woofer.) If you want to play Blu-ray movies, you'll need high definition multimedia interface (HDMI) ports on your system. These are necessary to support high bandwidth audio formats like Dolby TrueHD, as both bandwidth constraints and digital rights management issues prevent their use on the older optical and coaxial digital cables. HDMI also is required for high definition music formats such as super audio CD and DVD-audio, both of which support multi-channel recordings. You also will want to keep in mind the video switching abilities of the receivers that you're looking at. Does it have all the inputs you'll need? Can it actually switch HDMI, letting you choose different inputs? Some cheaper receivers can't send non-HDMI video signals to an HDMI output.

Music

Playing a stereo recording doesn't require much in the way of modern receiver technology. Seven speaker surround systems may not be the best solution in this case--they may be great for surround, but they tend to be underpowered when driving only the front two speakers. Just because they are simple in construction doesn't mean two speaker stereo setups are cheap. In the high end market, you will find more systems that have separated tuner, pre-amplifier and power amp components. You can end up spending thousands of dollars on an audiophile quality system. It depends largely on your own perception of sound. A $100 computer speaker might sound perfectly fine to one person and terrible to the next. It's all rather subjective. Try to listen to a setup before you buy it.

Impedance, Wattage and Frequency

Consider some technical specifications of the receiver you want to buy. One such term is impedance, or the resistance between the electrical circuit and the receiver. Different speakers have different levels of impedance. Most speakers have an impedance of 4 or 8 ohms, but 1 or 2 ohms also can be found. The receiver has to be able to support, or push, a signal past the resistance in the circuit, whatever impedance the speaker uses. Next is wattage, or electrical power. The higher the wattage, the higher power speakers the system can drive. Also, you should consider the frequency, or audible periodic vibration, of the audio signals you want to play back. For example, very low frequency sounds need a speaker that can reproduce it, such as a sub-woofer. Take into account the capabilities of the speakers you plan to use when purchasing a receiver. A mismatch in the specs can lead to system failure, or in a worst-case scenario, blown speakers.

Source:

Lenard Audio Institute: Speaker principles

HDTV Magazine: HDMI Part 5 - Audio in HDMI Versions