Ok, you opened up a can of worms as there are more opinions than there are people on this forum.
First, some questions that can help.
1. Will this be primarily for watching movies? Or listening to music? 50/50 mix?
2. Is the room in a house or an apartment? Basically, are you worried about neighbors hearing every sigh and moan if you watch a porno...
3. Is the room full of hard surfaces or soft? Carpet? Glass windows?
So more detail would help. But here is my opinion and since it's free take it for what it's worth.
Basically, $700 is not much of a budget. Let's be honest. You could start with a basic box package and be fine for years. Especially if what you are after is a basic 5.1 system and music is not a priority. There is stuff out there. Plus you could look at clearance and open box deals and piece together something not bad at all.
Anther way to go if you want some quality is to build your system a few pieces at a time. Such as taking your $700 budget and building a 3.0 system to start. Then save up your bucks and ad a decent sub. Then add surround speakers.
Now from a way to spread your budget, basically, you want the money to go into the front 3 speakers and a decent sub (if you can). That is where the bang for the buck will happen. For rear surrounds, there is a brand on this forum that people speak highly about but is low cost...I think the name was Behringer or something similar. They had decent bookshelf type speakers at a decent (low) price. Use these or other cheap pair for the rear surrounds as they provide ambiance, but the primary sounds comes from the front 3 (left, right, center). That is where the money needs to go.
If you want earth shattering explosions that rattle the fillings in your teeth, then your money needs to go into the sub. If you want decent sound, focus on the front 3 speakers. You can always add later.
Do some research and go listen at some stores. Especially if you will be playing music. Everyone has a different set of ears and different likes for the sound of a speaker. Some sound harsh to me and after listening for 15 minutes, I start to feel fatigued. But then I can be picky.