Hi DD,
You've got a reasonable budget, but a single system may not be the way to go for movies and music.
OK, for that money I could recommend you add the Denon AVR-1507 receiver (£250, but available for less, as it's coming to end of line) and some KEF KHT-1005 surround speakers (£300), or even the original KHT 2005 'eggs', which you can pick up for under £500 these days. If you're happy with more traditional-looking speakers (which will deliver a better sound-per-pound), consider the Q Acoustics 1010 5.1 or Wharfedale Diamond 9.1 packages (both around £500).
That would give you - together with your DVD player - a more than decent surround sound set-up - certainly one that would best a one-box home cinema system.
However, it might not meet your musical needs. The problem with home cinema kit is that - apart from at the higher end of the market, and even then there are compromises - it's not designed to excel with music: movies are its priority. Timing and integration of music are the most common flaws - music can sound all over the place.
Even Cambridge Audio describes the DVD player you have as a movie machine - it saves any claims of 'audiophile' music performance for its higher-end, Azur players.
I'd suggest you arrange a demo of a set-up like this - take along some of your favourite CDs and see what you think.