Which is better: separates or receiver?

At that price a big Denon receiver is excellent, or B&K, then Integra. My Denon AVR-5700 has given me great service and is only topped by components costing twice as much. It also depends on your speakers and room size.

Kt, and jerie make good points. If you max out your budget and get used gear you can get a good seperates system, but if you also think about getting a near top of the line receiver like the Denon AVR5700
second hand as wel,l you can have almost every function you need at under $1400, leaving some room for cables. Michael Fremer stated in the Stereophile Guide to Home Theater that the DAC's in the 5700 were worth the price of the receiver alone and that it reminded him of the awesome Linn system for 5.1 channel use. It is very easy to think of the budget without cables, but if you choose wisely you will get a significant improvement in sound. IMO they don't often come cheap, I have heard many very good cables that are reasonable, but no great cables at the lower price ranges. To be specific I think you may need to spend at least $750 on speaker cables and interconnects to get it right.