A full 1080p setup is kinda like a second monitor for your computer. Before you have it you really wonder if it's all that necessary since what you have works fine, but then when you get it you wonder how you ever possibly coped before.

For a good portion of movies, is it worth the cost? Not particularly. But for the movies that take full advantage of HD, oh hell yes it's worth it. Once you go HD it's hard to go back even if you're just watching a silly comedy. I grit my teeth and bear it through watching upscaled dvds, but given the chance I will always watch a movie in HD no matter what it is. It's even to the point where unless it's something so visually stunning like Avatar, I'd rather watch a movie at home instead of the theater.

For the recommendations, I would also add:

Monsters Inc.
Cargo
Sunshine
Ratatouille

I have a PS3. Any need to get a HDTV and surround sound to go with it. I have a small living room about 9'x13'. Need help finding the right set up. Would like a 46" TV and maybe the small pedestal speakers to fit behind couch or small enough to hang on the wall.

A 5.1 surround system should do fine for a 9 x 13 room.

Remember to get a Dolby or THX certified system, as they produce much better sound than other speaker systems.

Ideal placement - the front right/left speakers on either side of the TV at a 30-degree angle towards you, the sub-woofer on the left side of the TV on the floor (with it's air firing bass-gun towards you), and the rear right/left speakers on the wall/stands right behind your seating arrangement (the sofa/couch), at about 35-40 degrees towards you.