Hey Spender
I personally wouldn't want to be playing on a 26" TV. I've got a 26" Samsung which I use as computer monitor.
As for the surround system... it's doesn't have HDMI

Could come in handy though if don't already have a DVD/CD player... for $200?? how much was it new??
I've got a Sony System which I think has better specs than that and comes with Amplifier with few HDMIs... and got it for bit over $500. So dunno if $200 for that is such a good buy.
If it's something you're looking to be playing a lot of PS3 on, I would suggest you get something better. But as a spare only.... ? maybe