I'm looking for a modest and discreet living room audio solution and I need a little advice.

I think a Squeezebox 3 will be all I need as an audio source. Predominantly, we just want mp3 playback, but occasional (Internet) radio (BBC R1 and Virgin) will be handy.
I'm still open to suggestions on alternative sources here - I prefer a networked solution based around my current mp3 collection and it would be a bonus not to have to maintain a separate set of files just for the living room.

I have CAT5e sockets strategically placed around the living room but I'll probably use the Squeezebox on wireless just to save a wire! We want a minimalist solution that's as unobtrusive as is reasonably possible.

The biggest problem is that I'm getting bogged down while looking at amp/speaker choices. Realistically, I want to keep the amp/speaker budget within £200 (~$400USD) but that's way more money than the £50-£100 I'd originally earmarked for this "simple" end of the solution! The more I look at it, the more it seems I'm faced with spending. Perhaps there's a cheap and straightforward solution I'm missing here?

The majority of powered speakers are either iPod-orientated or PC speakers. My instincts tell me that PC speakers are optimised for a listener within 18" - 2' and they'll be rubbish at 8 - 10', but maybe I'm wrong on this?

One of the rat holes I went down led me to the Bose ACOUSTIMASS® 3 stereo speaker system. Aside from the cost (£200), I really like these because, once the subwoofer is hidden away, the speakers are tiny (~7cm). But then I'd need an amplifier of some sort which adds cost and to the real estate of the whole end solution.