Unless you have money burning a hole in your pocket you really don't need to upgrade. If you have a good Bluray player then it should decode all of the lossless audio codecs and pass them over HDMI to your receiver as LPCM. The sound quality will be indistinguishable from having decoders in the receiver.
The Yamaha 861 also already does upscaling to 1080p and all Bluray players will upscale DVDs to 1080p also. The 861 will also upconvert all analog inputs to HDMI out.
Take the money that you would have spent upgrading the receiver and get a top notch Bluray player (I recommend the PS3).