I plan to use surround sound for my Skyrim experience and my budget is very limited... can anybody recommend me http://www.amazon.co.uk/gp/product/B004EIXRZ4/sr=1-13/qid=1320273118/ref=olp_product_details?ie=UTF8&me

No, don't buy a gaming headset. Buy a nice pair of dedicated headphones and a separate, desktop mic if you need a mic. I recommend Sennheiser 555's or Audio Technica ATH A700's, quality phones at a good price. Of course headphones can get wildly expensive so it depends on your budget. You should also have a dedicated sound card to hook them up to.

I will look in to a Sennheiser product then, thank you.

I use a pair of these for my gaming headphones, they sound amazing. A bit more expensive but they sound great. http://www.amazon.co.uk/Sony-MDRXB700-Giant-Headphones-Driver/dp/B001UE6PE0/ref=sr_1_cc_1?s=computers&ie=UTF8&qid=1320532225&sr=1-1-catcorr

My only complaint is that the cord is a bit short, but getting a cord extender fixed that for only an extra $3.

If you want "surround sound" with headphones, you're better off with stereo headphones (the ones Aliensixual suggested are good) and a sound card or external device that does surround sound processing. Creative cards are good for computers. ASUS cards are also good, but use a different kind of system (Dolby Headphone). For Xbox (and PS3 maybe?) get an Astro Mixamp, which also uses Dolby Headphone.