Confused about 7.1 Formats


I am a bit confused about all these formats (kind of new to all this). I have been looking at the Anthem AVM20 and the new Krell Showcase coming out soon. The thing is that they are all 7.1 pre/pros -- does this mean I need a seven speaker setup? What would happen if I wanted to watch a DVD such as Gladiator and I have a 5.1 setup for speakers? Will it work properly or will I be missing something. Isn't the DVD encoded with 5.1 so it will only play 5.1, if so is the only reason they call it 7.1 is for when movies start coming out on THX Ultra 2 and the like?

Thanks for all the clarification, just nervous as I am working on a tight budget -- two speakers extra means more $$$.

JPLENHART
jplenhart
I was on a flight this week and picked up some HT mags, Sound and Vision and one other that I can't remember, not Stereophile GHT because I sub to that one. Anyway, one of them featured the new THX Ultra2 system and explain the new 7.1 decoding and setup in great detail. You might look to find that rag and learn a great deal.
I am currently running a 7.1 surround theater.There are know 7.1 dvd's as of yet but there are a few 6.1 discrete the 7.1 format is a long way off I think as there are so few 6.1 to date.I have a Denon AVR-3802 reciever wich has 110x7 watts but will not do 7.1 discrete,only 6.1 discrete and matrix and I also have a wide screen mode that claims to produce 7.1 from a 5.1 format.All and all with the 2 rear channel speakers the sound is awsome and I highly recommend using this set up as the dvd formats are improving every day.As for your set up it will cost you alot of money to do this right using amp/pre amp method becouse a 7 channel amp will run you about 3,500 dollars but if you have your hart set on that method check out B&K products.Other wise if you want to use your system mostly for home theater I would look in to audio video recievers.It will save you money and still get great sound from your movies.