The 3700 would be my favorite avr of the group due its pre-outs and Audyssey XT32 features as well as likely best power supply of the bunch, but that doesn't mean in your budget it works well
. As you go up the models, you gain certain features and need to make your own determination of value in the long run.
I'd still want to get a better sub. A single budget sub like the RSL Speedwoofer 10s, or maybe a pair of something like the Dayton SUB1200 or SUB1500 is another budget idea.
I'd lean towards those Monolith speakers THX speakers, they reviewed well here on AH.
Another budget idea is to start just with 2.1 or 3.1 and worry about the rest of the speakers later; and matching is most important across the front generally (ideal to use the same speaker across the front, too).