To my great dissatisfaction, it turned out that Sony Bravia DAVHDZ235 does not have a digital in. I don't know why I assumed that it would. It seems as if Philips is more digitally diligent. Their HTS3555/37 has a DTS and Dolby Digital Decoder. And the speakers are not as huge as on some other models, and the main unit is somewhat slim.
It also has a MP3 line-in and a USB port. It does upconversion to 1080i and even plays DiVx files.
BestBuy has it for $180 or something, but from the reviews (quite good, I must add) it looks like it sold for $156 at some other point.
Here is the manual to this Philips HTS3555 home theater:
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