Audio Systems: re-using an older set of speakers?

Question
I have an old panasonic set with a subwoofer, 5 speakers and an av control receiver. I recently ordered a cable to connect phones/ipods to the av receiver to try and make use of these old speakers. It works but the sound is super distorted and sounds awful.

What can I do to make these speakers sound nice while playing from an iphone?

Speaker models are Panasonic Model No. SB-AFC280, subwoofer is SB-W280 and receiver is SA-HT390.

Can I buy a newer receiver that will still work with these speakers/sub and also with iphones etc? If so, is that the cheapest option or is cheaper to just buy an entire newer system?

Basically, I know absolutely nothing about sound systems at all. Have tried reading up on it a bit but am still completely lost and need some guidance.

Answer
What type of input are you plugged into on the receiver?
Since the iPod output is hotter than a standard line level output, you might want to roll the volume down on the iPod as it might be overdriving the circuit.

Do you have any other device that you could try on the same input (CD player, DVD player) to test the input? There could be a chance that the input is bad as well... Trying a different device can help troubleshoot the problem.

I hope this helps... Let me know if you have more questions.