I bought Panasonic 5-Disc 800 Watts Home Theatre System three years ago. Recently I visited a friend and he has a same kind of system from Sony and a separate Yamaha receiver. The sound is much better. Should I conclude that if I buy receiver my system will also give better performance?
That would be a safe assumption. Separates almost always outperform packages systems. Obviously, the speakers are big part of the equation so if you are buddys, ask if you can borrow his and listen for yourself before deciding which part makes better sense to upgrade first.