Although the Cambridge system would probably sound fine, a lot of high-end speaker manufacturers make entry-level speakers that will offer significantly better performance for the same price or even less (and put a lot of other much more expensive systems to shame as well).
I think the Hsu STF-2 at $350 is tough to beat for a high-quality, near-full-range sub. Paired with the new Paradigm Atoms ($250) he'd have a speaker system that's hard to beat and come in right at $600 new (Atoms were just reviewed in both Soundstage and Stereophile). Other sattelites to consider in a similar price range are those from PSB, Energy, Epos, Axiom, any of which will mop the floor with any Cambridge system. If size is an issue he can look at the little balls from Gallo and Orb, which also offer nice freedom of placement possibilities.
Another very different option would be the Magnepan MMGW paired with the Hsu sub, if he likes the idea/look of planar speakers.
Although not necessary right off the bat, any of these speakers will benefit from better cables. DH Labs, among others, makes cables that don't cost much (relatively speaking) but would allow any of these speakers to show more of what they can do. Would also make a nice birthday gift for the future.
I doubt you can go wrong with any of these options, and all of them will very likely blow his socks off. Hope this helped, and best of luck.
