Hi @hawk0694, thank you for reaching back to the Sonos community. I appreciate you for bringing this concern to us. Let me help you with this.
The Sonos Arc is compatible with your Play 1's and Sub. They will work together as a 5.1 home theater setup. The new Sub is two force-canceling drivers at the center of the Sub eliminate vibration and rattle so you get powerful bass without any distortion. If you upgrade your Sub, your system will be working on the Sonos S2 system.
The Arc has two up-firing speakers within it that sound best when positioned either on a tabletop, or wall-mounted below a TV. Also, Arc requires a minimum of 5.5 inches on the front and sides of it, with at least 2 inches between the backside of Arc and the TV when in a tabletop orientation. If wall-mounting, it is recommended to have a clearance of at least 5.5 inches between the TV and Arc. Your rear speakers or surround on the ear level and should be at least 2-3 feet away from the nearest wall.
Hope this helps. We can wait for suggestions and feedback from our Sonos community members, they might provide additional information about this. You may also contact our Sales support for more information.
If you need help with any other information, please be sure to let us know.
If you upgrade your Sub, your system will be working on the Sonos S2 system.
Just to be clear, you do not have to upgrade your Sub to run the Sonos S2 system. I replaced my PLAYBAR with an Arc, and kept my PLAYm1s for surround and my Sub. All are running S2.