A lot of movies are recorded in a "5.1" format, in which there are two front speakers, a center speaker (for dialog and continuity of sound effects), two back speakers (providing surrounding sound), and one providing low-bass sound (the .1). There also are 6.1 and 7.1 formats, though they are not that popular in commercial releases.

It would be difficult (but not impossible) to electronically simulate the various sound delays and the "feel-it-not-hear-it" bass that is part of the theater experience. Two good stereo speakers will provide a great improvement over TV speakers or home-theater-in-a-box. Two good stereo speakers and a matched center channel would, IMHO, get you 70-80% of the way there. But (again, IMHO) 5.1 is required to properly decode Dolby-encoded video.

steve o, thanks for your insights. I am still considering all options and may run my stereo speakers just for music and do dvds on a separate speaker system...

Your two speakers will be a huge upgrade from the tv speakers, but nowhere near what is possible with a discreet system. Most DVSs / movies etc are recorded now with full seperate audio channels for each speaker, and that cant be duplicated with just two. I run full Martin Logan system, and prefer to listen to music on only my LandR front speakers...the surround sounds aweful to me...but for tv and movies, its as good as any theater when full surround is on. Its a tough call design wise, to get great performance and have it blend in...ive adjusted to life with huge speakers in the room. its the tradeoff i guess