We like this ideas from San Interior Design, which shows how one could gut out a bedroom closet to be used for the purpose of creating an inset bedroom home theater setup (or a home office). Many homes these days come with an excess of closet/storage options, so why not take advantage of the extra space and reconsider it to house and hide a television and components?
Something like the Tria Self System or larger Stolmen Flat Panel Mount from IKEA could be the foundation of your home theater in a closet setup. Consider installing a bathroom fan to ventilate all your components, lest you overheat your setup. The best thing about a setup like this is you could keep doors to shut away the whole system while not in use, but with careful planning and hidden wires running through a wall or stand, the setup should be decor benign even if no doors are used, as shown in the first photo.
Thanks to santasel for use of top photo!