Hi Charlotte
Sony make some of the best DVD recorders, and we've just tested the new RDR-HXD970 model (£375) in the Sept issue of What Hi-Fi? Sound and Vision, which has just gone on sale. In fact we've done a whole Group Test of DVD/hard disk recorders, so you might find it useful to buy a copy! The new Panasonic recorders are good too.
Anyway, the Sony upscales all the way to 1080p, includes a 250GB hard disk, dual analogue and Freeview tuners and is good at playing DVDs, so that should fit the bill perfectly.
As for surround sound, there are a couple of solutions. If you want a compact, single unit to add 'pseudo' surround sound to the Sony DVD recorder, then it's worth considering the Yamaha YSP-1100 sound projector (£900). Basically this has multiple speakers and amplification built in to a single speaker unit that sits under your TV, and it bounces sound off the walls of the room to create surround effects.
It won't create true 5.1 surround sound, but it's very effective nonetheless.
If you want full 5.1, with proper rear speakers, then consider a budget multichannel amp such as the Denon AVR-1507 (£250) with some style speakers such as KEF's KHT1005 sub/sat package (£300). The Denon is about to be replaced with a new model, so there are some cracking deals to be had and some retailers are bundling the 1507 with the KEFs.
Ah, looks like Clare got there before me!