I've been thinking about the Bang & Olufsen LCD TV and surround sound. It's much most expensive than others I've looked at. Can someone who has it tell me if it's worth the cost?
It isn't worth the cost. If you aren't in a bright sunlit room get a 1080p 50-60" plasma from Pioneer (or Pioneer Elite) or a 50" or 58" Panasonic 1080p plasma. They both outperform every LCD, although the new Samsung 81 series LED lit LCD's are very good in their 46" and 52" incarnations. The Sony XBR4 and XBR5 are essentially the same (save money and get the XBR4) and are also superior to most every other LCD's. Sharp also makes good LCD's and supplies the LCD panels to many other companies. Of course, the lighting of the panels and the internal de-interlacing and scaling quality varies from company to company and most often from cheaper models in the same line, not to forget about cheaper LCD's.
If you want great surround either get a solid receiver (such as Denon 4308ci, Onkyo SR-875, or Pioneer Elite 94TX).
Even better would be the new separate amps from Emotiva.com, which makes both 5 channel and 7 channel amps that are both beuatiful and powerful. Then get an Integra DTC-9.8(the Lexus-like line of Onkyo) surround pre-amp, or if you want to really splurge get the Anthem Statement D2 or Anthem AVM-50.
Pioneer Elite is releasing the SC-09TX next month and will likely be the best receiver currently made, albeit at an MSRP of $7,000.
Good speakers are a must, whether you need for design sake in-wall or in-ceiling speakers, or even better great bookshelf speakers on a stand or even floorstanding speakers. A great self-powered subwoofer is a must.