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If your purchaser is on a budget, and is going HDMI (laptop) in to the receiver than HDMI out to the TV, good models (and all available under $300 right now) are:
Denon AVR-391
Onkyo TX-SR308
Pioneer VSX-520K

However, 57 is right that if you want all analog devices to also feed via HDMI, you'll need to get out of the $200s and into the high $300s. Least expensive models that do this would be the Denon AVR-591 or the Pioneer VSX-920. If you go to the US regularly, I believe both of these models are substantially cheaper there. The 591 converts all analog signals to HDMI, whereas the 920 has an upconverting chipset.

To 57's point about the transcoding (upconverting), this can happen on the AVR, or your set itself will do it. I've heard people say an upconverting AVR is great - I've also heard others say it wasn't worth the cash. Regardless, people need to remember that it is difficult for the gear to put things in that aren't there, and a VHS tape on an HD TV always looks bad.
 
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