Upconverting Receiver?

Question

Hello,
I seem to be confusing myself with a home theater set up. I recently bought a Samsung 46" (LN46B640 - I don't believe this model runs 5.1 surround via optical) and I am trying to understand what I need to put together a decent home theater system. I will be hooking up a ps3, HD direct TV dvr, and a 5.1 surround sound. My plan is to purchase a receiver in which I can run all my sources to, then have my receiver run to the TV. I will use my ps3 for blue ray and upconverting SD DVD's. So the questions I have are as follows:
1. Do I need an upconverting receiver with this system?
2. Will I be best off running everything though the receiver, then on to the TV?
3. If I do need an additional source for upconversion, is it better to have a receiver or DVD player do it?
Sorry if these questions seem a little noob-ish, I have just been reading myself into confusion.
Thank you for your assistance!

Answer 1

Nowadays, you can get receivers around $400-500 that do the work that $1200 receivers did 2 years ago.  Take a look at Onkyo and Denon branded receivers at a local BB with a Magnolia Home Theater. If you're not around one of those, you can still find similar models from Denon in regular Home Theater departments. Keep in mind, the few TVs that actually route dolby digital through optical back to a receiver do not process Dolby TrueHD or DTS HD, formats of sound you're paying to hear on today's blu-ray players and movies.
As you move up, you will gain features in receivers like better upscalers, better amplifiers for cleaner sound with less distortion, more HDMI inputs, internet connectivity, file-sharing, ipod compatibility, on-screen set up menus, etc.