Yes, money does make a difference to the quality you of the sound that you will get. This does not mean that paying twice will give you twice the performance. Home Theatre systems vary in price from $250 to hundreds of thousands (honest!). You do not get 1000s of improvement from one to the other. What you are dealing with as the money increases is what is called the Law of Diminishing Returns. As you spend more, you find that you get different rather than necessarily better results.
For some people the law of diminishing returns kicks in early and for some people it kicks in later. Also, as time goes by and one gets used to one's current system, the law usually changes. i.e. where you would say you'd never spend $1000 on a system, once you've lived with a $400 system for a couple of years, the $1000 system won't seem so expensive.
It's a very slippery slope! Beware...
There are some stores out there who do demonstartions. It's worth your while finding one or two of these places to see what the fuss is all about and perhaps hear the difference between, say, a $300 and $1000 system. The thing is you have to bear in mind that the person demoing the stuff to you wants to find out what s/he can get out of you! That said they're not all sharks, they're mainly looking for another customer. When you hear different systems, especially home theatre systems, it's very easy to be impressed. Listen, try to enjoy and always try music as well as home theatre material. Music always sounds less impressive, possibly because it's not 'engineered' in the same way as home theatre material is engineered to suit soundtrack. If you're impressed by bass, listen out for whether you're impressed by the volume or is it that the bass is actually tight and fast and has definition? Most entry level systems come out with a lot of bass, just not really under control. Very impressive, but not necessarily something you want to live with.
In the end everything is a compromise of course. What you have to do is find the best compromise for you (we all have different tastes) that you can afford comfortably, and which fits all your criteria, such as how the kit would fit in your main listening room.
Once you've found out about a few names and understand a bit more about how these systems are put together, we will be more able to help you with a little advice. In the end, however, it's your opinion that counts, not ours, since you have to live with it in the end!
Tina- we need more info to help. Budget? Room Size? By Home theater system- do you mean only speakers/speakers and receiver/ speakers receiver/cables and display.
The room is about 3 m x 6 m and the TV would be almost in the middle of the 6 m wall. I've got a Philips 730K DVD/VCD/MP3 player and a Philips 32 inch wide screen TV.
I need a decent set of speakers and amplifier. My budget is around 3000$ - 4000$. Can you give some good hints on what I can buy, which brand and model is the best combination for the equipements that I have at home?
Have you listened to any equipment? Do you have access to any audio specialty shops other than the big boxes like Best Buy and Circuit City? Who will you expect to hook every thing up?
That said they're not all sharks, they're mainly looking for another customer. When you hear different systems, especially home theatre systems, it's very easy to be impressed. Listen, try to enjoy and always try music as well as home theatre material. Music always sounds less impressive, possibly because it's not 'engineered' in the same way as home theatre material is engineered to suit soundtrack. If you're impressed by bass, listen out for whether you're impressed by the volume or is it that the bass is actually tight and fast and has definition? Most entry level systems come out with a lot of bass, just not really under control. Very impressive, but not necessarily something you want to live with.