For $700, I think you will have to upgrade the DVD player & Receiver to a Blu-ray/HDDVD and a HDMI/TruHD/DTS-HD MA receiver in the future. You can keep the speakers for surround sound in the future. Depending on the TV you have, an upscaling dvd player w/HDMI may not be significant. For example, if you have a 1080p HDTV, then yes, a 1080p upscaling dvd player matters. But if you have a 480i-- 20" TV, 1080p upscaling won't matter.
This is my recommendation:
1) Definitive Technology StudioMonitor 350 ($225 each x 2 = $ 450)
2) Onkyo TX-SR304B ($160)
3) Sony DVP-NS57P ($60)
Grand Total: $670
The DefTech SM350s have built-in 8" passive subwoofers, with very good response down to 40 Hz (The Audio Critic), although the stated specs say (26 Hz-30 kHz). Thus, for a dorm room, this may be all the bass you need! Sound & Vision Magazine and Home Theater Magazine also praised the StudioMonitor 350s, so you can check out their reviews! These are speakers that you can definitely keep for surround speakers in the future.