I was always advised to spend 1/3 on each part - CD player/turntable, amp and speakers.

I would always go to a hi fi store, I use Audi Excellence in Cardiff, but i assume you are in Taunton. I'm not an iPod person, I still use CDs and vinyl as the quality will be better. A good system would show up the deficiencies in mp3 type music though. A good set of cables between amplifier and speakers would also help, aim for about £100 for those, and a good pair of cables between CD (if you're having one) and amp are better than the basic cheap leads supplied in the box, they make a heck of a difference.
So if you are only using an iPod as input you could spend about £450 each on amp and speakers and about £100 on cables.

Have a look at the website
http://www.audiot.co.uk

Look up a hi fi shop near you and go and visit, try and avoid Richer sounds.

Tony