I have recently posted a similar question, yet to receive a respone also. I am looking for a system which can act as my primary hi-fi as well as being my surround sound when watching films.
From what I have read on these forums, the Onkyo TX-SR605 seems to be the weapon of choice, especially seeing as Onkyo cannot seem to put a foot wrong at the moment and they also swept the board in the '07 Awards.
The Tannoy Mercury F1 customs have had a lot of mention recently and have won an '07 Award. They do not have the discreet rear speakers however, and may not deliver when listening to 2 channel music. The Kef iQ1's sound like they wouldn't perform very well as your fronts either. The MA Bronze BR2's (Best stereo speakers £150 - £250 in '07 Awards) appear to be much more promising and there doesn't appear to be any compatability issues with the Onkyo 605 as raised in other posts I have read.
Sub woofers and the word "compact" don't usually go together. The smallest I can find that is any good is the Velodyne Microvee at £575 and only 9" square. A little bigger than that is the REL Acoustics Quake at £350. The MA Bronze BRW10 sub is just over £300 and 12" square (still quite compact as far as subs go), but if you decide to go for all MA Bronze and the BR2 AV package, you could save yourself some cash compared to buying separate items.
Personally, I think I am going to go for the MA BR2AV 5.1 package and hook them up to the Onkyo 605 in a room which is approx 17ft x 14ft.
Hope my opinion helps, but I do not claim to be an expert and it would be interesting to hear from someone else!