Out of curiosity. what all would you need.
TV
VCR
DVD player
Speakers
Audio reciever/amplifier
Cable/Satellite reciever
What else?
A bookshelf.
Well, these days you can slip a TiVo or other DVR device in there. Couldn’t hurt to have a CD player, but the DVD player can handle that duty in a pinch. Beyond that, comfortable seating, snacks, and lovely beverages.
My fiancé after a couple of glasses of red (no offence hon!)
software? Some DVDs and CDs to listen to, hardware without software is pretty useless. I consider the software to be the most important part of the system.
I’d also add a record player (and LPs) to the mix, but that’s what I would need.
I have the above (minus Tivo and record player) and my computer wired into it (so I can listen to my mp3’s and watch my downloaded video files). And the bookshelves, natch. 
Surround sound is nice…
Hookers and Homebrew!
She told me she loved me like a brother. She was from Arkansas, hence the Joy!
I’d dump the VCR. And a decent DVD player will generally play CDs better than a decent CD player, so you don’t need one of those.
Im going to have to go ahead and disagree with you there. The slow load time on most DVD players is reason enough to have a CD player. I’d take a $500 CD player over any DVD player under $1,000 (unless it is an SACD/DVD or DVD-A/DVD player).
You need a kickass remote to replace the bundle of remotes that come with a home entertainment system. Make sure you get one that has learning capabilities as well as macros.
A “traditional” home entertainment system has two key things: Surround sound and a big TV - think 32" or more. Some sort of projection set is even better.
Program source can be any or all of:
DVD
VCR
Satellite
Cable TV, if you must
But really, the defining item is surround sound.