Buying a receiver is one of the most important decisions you're going to have to make when building your home theater. The receiver has a number of functions including; connecting and switching audio sources; connecting and switching video sources; decoding surround sound formats; amplifying an audio signal and sending it to your speakers; tuning in to radio stations; and acting as the interface between you and your home theater.
The first thing to think about is whether you want a receiver at all or would you be better off buying a separate decoder, amplifier, and tuner?
Despite being a more expensive route - not to mention the extra space needed - separates do have some advantages. You can pick and choose your own combination of components, can upgrade each component individually and won't lose all the functions if one piece develops a fault. On top of that, having each electronic component in a separate box does improve sound quality when compared with having them all on one circuit board.
However, the separates route is more expensive, more complicated and needs more space than buying a receiver. And for most people its uneccessary. Today's receivers do a very good job in all of their functions.
So what should should you look out for when buying a receiver? The first thing is to make sure that it has ll the inputs you need for the equipment you need to connect to it. Sounds obvious, but its very easy to overlook. As a mimimum it should have digital audio inputs (optical and co-axial) for Dolby Digital and/or DTS. It should also have analogue audio inputs for CD player, set-top box and possibly DVD-Audio or Super Audio CD player (the last two currently don't have digital outputs in order to make it less easy to pirate CDs).
You should also consider whether you want to route all your video sources such as TV, DVD player, and games console through your receiver. Doing so means you can switch between sources from one controller, very easily. But if you want to do this you'll need to make sure the receiver you're interested in has enough video inputs. These could be S-Video or component inputs are best, or if you're in Europe, Scart. You should also make sure the video output from the receiver is of high quality, so again, it should be S-Video, component or Scart.
If you can test a receiver before you buy, its worth comparing the quality of a video signal from a DVD player when its connected directly to a display and comparing it with when its connected via the receiver. There shouldn't be any noticeable difference in quality.
The power rating of the amplifier is also important. The bigger the room you have for your home theater, the more power you'll need. And makes sure that the power rating is quoted in Watts per channel - the last thing you want is to get home with your 100Watt receiver and discover that its power is split between eight speakers in you 7.1 set-up. It's impossible to specify how powerful your amplifier should be, but if your home theater is in a reasonable-sized room, as opposed to an aircraft hanger, 100Watts per channel should be fine.
Finally, don't forget the remote control. It's the key interface between you and the reciever and you'll spend a lot of time using it. So make sure it's comfortable and straightforward to use. The last thing you want is to have to spend ages wading through on-screen menus to get what you want.
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