Im writing this in simple terms, for people who don't understand too much about stereos so if you have anything to add feel free.
Ok first off you have to tell your self what you want. The main question is do you want subs, they will add weight to your car, and in the long run make your stereo at least 2X as expensive as without them. Personally I love a sub.
NOTE: Prices I quote of internet prices, you can probaly find them slightly cheaper online or ebay but if you buy local expect to pay more.
Power Ratings
Ignore WATTS...Read the RMS!
RMS is "Root Mean Square". It is a measurement of AC Power. It is the effective power used by a device. In other words RMS is the watts rating that your speakers will output on a continuous basis.
Basically you just want to do apples to apples. If your amp or stereo ouput is rated in RMS or Peak that is the measurement you would use to for the power that speaker will handle. I always go by RMS never wattage....why? All companys should rate their stuff in RMS and peak wattage. But some companys measure their RMS diffrent to make their stuff seem more powerful.
Example:
Company a: Their subwoofer is 1000watts but only 200rms
Company b: Their subwoofer is 500watts and 250rms
Your going to think yeah, company A's is better but it really is not, chances are its a cheaper quality brand and they are measuing their rms diffrent to 'trick' you. It shoud roughly be around 50%.
So always go by RMS wattage when matching components!
Headunit I would spend at least $200.
The key to your stereo. Now that everyone has a IPOD make sure its Ipod capable. I always recommend Alpine, pioneer premier & kenwood are nice as well. Now some people just think getting a cheap heaunit they can put more money towards speakers...this is right in a way but more expencive headunits have better components and features which will get the most out of which ever speakers you choose.
The average quality headunit should produce 18rms x 4 (x4 means to four channels...will power 4 speakers)
Speakers I would spend at least $75 a pair.
Good brands to look into are: JL, alpine, kenwood, boston acoustics, infinity, eclipse (in no particular order)
The best speakers are 6.5" or 6.25" usually, why because there round, think about it! Your car might only take 5x7 or 6x9 but 6.25" will fit, you might have to make a simple adapter plate but its easy. 5x7 and 6x9 design's tend to produce more bass.
Now your headunit lets say it supplys 18rms/50watts peak. Your not going to find speakers to match that, your best bet will be to try to find some in the 30-50rms range if you can, as you will get the most out of them for your money (higher wattage = more expencive = not nesscarly louder or better) if you bought some 200rms speakers and put your headunits 15rms to them not only would it probaly ruin your speakers but 25rms speakers will outperform them (this is of course within reason).
Getting a sub? + $300 approx for speakers if you want a balanced sound
Now if your getting a sub I suggest to get a component set, that has 2 midrange (6.25 or 6.5") speakers, 2 crossovers and 2 tweeters (tweeters produce just highs). Reason I suggest this is your sub will produce lots of bass, it will be hard to hear vocals and some sound over it, but with a component set it will cut right thru that and you can really crank up your stereo. A component set expect to pay $150+, then you will need an amp for it id say at in the $150+ range. A 2 channel amp will work fine since you have the crossovers which split it up for the speakers and midrange and filters out power to the tweeters (of course a little tweeter cant take as much power as a full speaker).
Subwoofers Look for dual voicecoils (D2).
Recommended brands...too hard to say, tell us what your looking for interms of sound! BTW: I love JL, best bang for the buck!
Dual voice coils basically is two subs in one, you need 2 channels of power going to it, so a 2 channel amp is best. They sound better, and handle more power, make more bass.
People get all attracted by looks or by big magnents, big surrounds etc. Ignore this, stick to the RMS rating. Now with subs are probably the hardest to purchase if you dont know what your doing. Feel free to ask in the forums and someone will help you.
There are Sound Quality Subs, SPL (sound pressure level) subs. Then there are some that are a good mix.
Personally one of my favorite subs is a JL.
JLW3 is rated at 250rms, I only paid $75 for mine off ebay! IMO it sounds better and louder then lots of 500rms subs out there! Dont let small sizes or looks fool you on subwoofers. If you run one subwoofer you probaly want it to be D2. Dual 2ohm is what that means.
Amplifiers The most important part if your stereo interms of sound quality & performance OTHER THEN A CUSTOM SUBBOX.
Reccomended brands: JL, Alpine, PPI, Orion, Kenwood.
Im not going to get technical here. But the more you pay for an amp the better quality you will get. Find the most expensive amp in your price range with the lowest wattage and it is probably the best amp. What im trying to say is the internal components make a big diffrence. One amp might be twice as powerful as another and half the price, but the 'cleaness' of that power will suffer big time, expencive amps have expencive internal parts which diliver clean, crisp, undestorted power which will give you a clean crip undestorted sound. Please dont cheap out on an amplifer, headunits are the same way! Im not going to get too detailed but thought I would shoot out some examples.
What to look for? Keep your eye on the THD rating!
What is THD? TOTAL HARMONIC DISTORTION. The amount of undesirable harmonics present in an output audio signal expressed as a precentage. The lower the percentage the better.
Here is an example:
JL Amp THD at Rated RMS Power: 0.03%
Clarion Amp at Rated RMS Power: 0.2%THD
Not to pick on Clarion and im using extremes but the lower that THD %# the better! The JL amp is going to sound a hellofa lot better!
THD is a lot more important when running speakers with an amplifier rather then subs, please keep it in mind interms of subs try to get a low THD but its not as crucial as when selecting and amp for your speakers!
Wiring
When installing new speakers in your car please buy new wiring and run new wiring to your speakers. You don't need anything too fancy you can spend anywhere from $10-100 for example. You get what you pay for? Not always, pick a happy medium in wiring.
Subs?/Amps? If your running an amplifier you cant go TOO big of wire but you can go too small, if your running around 600-1000RMS total I would suggest at least 4ga wire. If your 200-600rms, 6ga will be fine. Go for good material on the connections when buying terminals etc. Oxygen free copper is fine, silver or gold if you want to spend more money.