Looking to upgrade

if you're comfortable with used and already thinking Lexicon DC - I'd endorse the DC-1 which I'm using. I also recommend B&K 5 channel amps. I had a AV5125 which sounded wonderful (have since gone to monoblocks - much more $). the DC-1 and B&K AV5125 can probably be found for $1100-1300. Make sure the DC-1 has version 3 or better SW, preferably version 4. Better still, the DC-2 is a little more $ and has more digital inputs. I don't think you can touch the sound quality of this combo with a receiver.

Nice system. However, DPL II and newer DAC's will make a nice difference. To improve upon sound, you will either need a pricey receiver or go to seperates. The other option is to get a nice DVD like the arcam suggested above and let it do all of the decoding for you.
Hard to suggest what without a budget. I like Anthem and Sunfire...definitely a step above marantz.
Do you have a line conditioner? Even an inexpensive one will make a difference.
Better cables? better video?

Thanks for the suggestions. Elevick, can you recommend an inexpensive line conditioner? I think I'm going to pick up a Lexicon DC and also take a look at B&K amp. Regarding price range, around $2000.00 to upgrade. Is it best to spend the money on processor and amp, or should I be looking to change speakers. BTW, 100% of my system is dedicated to TV/Movie surround sound. I never listen to 2 channel stereo.

I agree with Teslaroadsters, changing your speakers will make the biggest difference. Try to match them all, or at least the same series (where usually the only difference is the size of the woofers).