Welcome Smiler.
1: As mentioned, the Wii doesn't play DVD's. However, the Wii is SO small, it's virtually invisible anyway (I am of course exagerating here

)
Wii plus a £50 DVD player from ASDA is better than a kick in the nuts (and cheap too)
2: At best, you'll get Dolby ProLogic. The fly out leads in the best cable available are component (YPrPb)....3 leads for video then, plus two more analogue L&R that your amp will decode into ProLogic
3: Your wife wants one. Isn't that enough? Don't you love her anymore?

:p (joking of course)
If you get one, you'll be so busy having fun, you won't notice the shortcomings....it's the price of an expensive night out at a fancy restaurant really...