I will make the assumption that you have a surround sound or home theater receiver and start from there. There are 3 main home theater speaker setups which you will see termed 5.1, 6.1, and 7.1 channel surround. You will also see mentioned the terms Dolby Digital, DTS, and Dolby Pro Logic. Let's dispense with the latter first: if your receiver is only Pro Logic (only older receivers at this point) you do not need to worry about 6.1 or 7.1 surround. There are some other formats such as Dolby Digital EX, Dolby Pro-logic IIx, Dolby TrueHD, DTS neo:6.1, DTS-ES, True-Surround XT, and undoubtedly more.
The two factors to consider are:
1. how many channels does your system permit, and
2. Do you want to buy that many speakers?

All the receivers that support more than 5.1 channels will also work fine with a 5.1 channel setup. Obviously, 7.1 will provide better surround sound than 5.1, but at the expense of two extra speakers. If you have a limited budget you will have to decide whether to buy 5.1 higher quality speakers, or go for cheaper speakers to allow for 7.1 channels. By the way, the .1 channel is the home theater sub-woofer. The sub-woofer is, in my opinion, really needed for home theater. A system will work without it, but I don't recommend going without for home theater. The center channel is also very important for home theater, serving to anchor the sound to the video screen. If you go to our site by the link at the bottom of this article you can see images for the descriptions following. These are the recommended placements according to Dolby Labs.

5.1 surround system:
A). Center speaker centered on video source
B). Sub-woofer(s) in arc with the main L & R speakers between speakers and video source
C). L & R front on a 22-30 degree angle from the sitting, on an equidistant arc connecting the center channel and subs
D). L & R surround equidistant and on a 90-110 degree angle from the sitting position
6.1 surround system:
A). Center speaker centered on video source
B). Sub-woofer(s) in arc with the main L & R speakers between speakers and video source
C). L & R front on a 22-30 degree angle from the sitting, on an equidistant arc connecting the center channel and subs
D). L & R surround equidistant and on a 90-110 degree angle from the sitting position
E). Rear center 180 degrees (directly behind) the sitting position
7.1 surround system:
A). Center speaker centered on video source
B). Sub-woofer(s) in arc with the main L & R speakers between speakers and video source
C). L & R front on a 22-30 degree angle from the sitting, on an equidistant arc connecting the center channel and subs
D). L & R surround equidistant and on a 90-110 degree angle from the sitting position
E). L & R rear equidistant and on a 135-150 degree angle from the listening position.
Sub-woofer Setup  Read More