Controlling light is usually easier in a lower level because there's less outdoor light interference. And the ability to insulate the ceiling and walls makes it possible to keep out a lot of distracting sounds and avoid disturbing other areas of the house. Another factor to consider is the size of the equipment. This is particularily an issue with the larger rear and front screen projectors. The basement often has extra space for equipment and avoids using valuable living space upstairs.
Many times there are features to a room that dicate where a home theater can go.
Built-in shelving, wall length, size and shape of the room, windows, etc., can eliminate an entire wall or half the room as placement possibilities. The equipment itself often dicates its location. The larger the screen, the farther the distance must be between it and the sitting area. As the layouts below illustrate, larger screens require more distance from the viewing area. Subtle design features can easily become overpowered by big equipment, especially small detailed items.