Do I really need a 7.1 receiver, or will a 5.1 receiver do?

The short answer is no, you don't "need" a 7.1 receiver. DVDs and Movies are recorded/encoded using 5.1 Dolby or 5.1 DTS. A 7.1 receiver uses DSP "digital signal processing" on the two surround channels of a 5.1 signal and splits them into four channels. This produces a larger soundfield by giving you two more speakers that are producing surround sound. You can see the difference in a 5.1 speaker setup and a 7.1 setup on the Dolby website by clicking here. As you can see, a 7.1 receiver will give you better surround sound. However, if you are on a budget and a 7.1 receiver is not an option for you, 5.1 will do fine.