We decided to do most of the basement remodel at one time, so we only get a huge mess one time, and part of the remodel is the home theater.
The 500 sq ft space under our garage is finished and is currently being used as our theater room. This consists of a projector, inexpensive home theater receiver (the DVD player on it is broken) and some cables strung along the walls. We don't have a screen yet, so we project directly on the wall. The space is wide open to the rest of the basement, so sound is somewhat of a problem. All this being said, it still makes a great place for watching movies and sports.
The first phase is to some additional framing to close the theater area in a bit. In general, we want to keep the house as open and multi-purpose as possible, but this area is currently too open. Here is the before layout:
The after layout shows the change to the walls (in orange). These two "boxes" create a doorway to the theater room and allow for a lot storage. They will also block a lot of the sound that travels up the stairs when the TV volume is loud, some of the light that comes from the back of the house.
This floor plan gives a 19 x 28 foot space, allowing for a full three rows of seating if we want.