I thought about this after reading all the posts.
I think we struck a reasonable balance between the two. My living room is 20 x 26 x 12' tall so I needed both a large screen and room filling sound.
The TV is a 4th generation 56" Samsung widescreen HDTV DLP set, not quite plasma prices, but the picture quality was rated higher than 90% of the plasma sets on the market. The DVD player is an upper end Denon unit with upscaling since DVDs are not able to produce HD quality output, the upscaling increases the resolution to mimic HD quality. The two combined make for a reasonably exceptional picture with either HD broadcasts or the lower resolution that DVD provides.
The sound system is a Denon unit, one of their upper-mid-grade units. It powers Paradigm speakers. I settled on Paradigm after checking a lot of sources and listening to a lot of speakers and there is no way I would go with one of the "popular" brands of so-called premium speakers. They are simply astounding in their ability to deliver clarity and punch. Most folks who buy Paradigms graduated up from the well known brands.
So I have a reasonable balance. The TV is reasonably high end. The DVD is reasonably high end. The surround sound is reasonably high end. Nothing is top of the line or outrageous, but all is balanced very well for the room dynamics. I've seen set ups that are twice the price I paid, but the quality difference is almost imperceptable at all normal viewing angles and normal audio levels. The top line systems will out perform my system at the upper ranges, but I'm not the type who turns things up that loud. But yes, I do have the ability to shake the house and rattle the windows, it is just a rare event for me to do that.