FWIW, here's my opinion.
If you are using little cube like Bose type speakers, then five feet may be okay, but you would still have to be sitting very close to them. You need some separation or you might just as well be running a single mono speaker rather than stereo, or multichannel speakers.
In-wall speakers can be pretty good. They're certainly convenient. However, you can't move them about a bit to get optimal placement. It's a "lifestyle" or design choice rather than an attempt to get the best quality sound when you go with in-walls. There's nothing wrong with that if you're looking for background music or want a multi-purpose family room home theatre. I wouldn't spend a lot of money on it if that's the application intended though. No point spending a lot of money on an exceptionally high quality set up that you can't take advantage of. A $2000 budget for receiver and a full HT speaker package seems appropriate for this type of application. People here can certainly give you good advice as to what brands to look at.
I do not quite understand what you mean by distinguishing satellite and bookshelf speakers. To me, they're the same thing, i.e. small stand mounted, wall mounted, or shelf placed speakers with limited bass response because of their small size.
