5.1 vs. 7.1 surround sound

Intriguing on the Maggies, but way too big for our room. I realize I'm giving up some fidelity, but how about some smaller solutions.

Thanks!

I have a feeling these might be at the northern end of your budget, but B&W are great speakers.
http://www.ebay.com/itm/B-W-CDM-7SE-Bower-and-Wilkins-Special-Edition-Audiophile-High-End-Speakers-/181625622871?pt=Speakers_Subwoofers&hash=item2a49bb1157

Another great pair, though I've never owned a pair myself
http://www.ebay.com/itm/Audiophile-VANDERSTEEN-2-SPEAKERS-w-SOUND-ANCHOR-STANDS-Look-and-Sound-Great-/301421406523?pt=Speakers_Subwoofers&hash=item462e1da93b

I'm not a huge fan of Infinity, but I've heard good things about these
http://www.ebay.com/itm/INFINITY-RS-5-Audiophile-Speakers-/151512465169?pt=Vintage_Electronics_R2&hash=item2346d8bf11

Thiels are legendary
http://www.ebay.com/itm/Thiel-CS1-2-Loudspeakers-Audiophile-Stereo-Speakers-/171610377185?pt=Speakers_Subwoofers&hash=item27f4c68be1

Ohm Walsh speakers have a fanatical following. I will own a pair one day.
http://www.ebay.com/itm/Ohm-Walsh2-Speakers-Very-Good-Condition-Free-Shipping-/151510507023?pt=Vintage_Electronics_R2&hash=item2346bade0f

You won't need a sub with any of these sets unless you really want to dig deep, typically for cinema.

I have a pair of vintage JBLs for sale if you want to go retro for the fronts.

I'll offer my 2 cents. I hate complexity in sound systems. Settings for the TV will be different than DVD, radio, CD, etc. Even between two different DVDs it will be different. One sound editor working on a David Attenborough documentary has a completely different ear and idea than another editor working on a Michael Bay Transformers movie. It all sounds ridiculous and fabricated to me.

I like mine as 2.0. Stereo. Period.

Did some measuring. For things to work the way I want them to work, looks like my max speaker height from the floor is 29 inches.

Maybe some vintage Polk Monitor 5 or 7s with the correct stands for proper time alignment?

Small sub with the 5s, not necessary with 7s.

Swank Force One wrote: Maybe some vintage Polk Monitor 5 or 7s with the correct stands for proper time alignment? Small sub with the 5s, not necessary with 7s.

That would be a nice setup. There are soo many options out there with speakers since you can go with older speakers and they'll still sound great. Technology hasn't advanced like it has with the electronic side of things.

Small update. Last night we listened to some Bowers & Wilkins--just their 6.5-inch bookshelf speakers plus 8-inch sub. Wow.