My local CC, to my astonishment, agreed to an even swap of my 6 month old Onkyo 700 for a brand new Onkyo 701 (after I pointed out that my 700 had the "ex phase" defect -- but I didn't reveal that I only have a 5.1, not a 6.1 set-up, so that in reality, the defect didn't really effect me at the time I did the exchange over Labor Day weekend, and thought that I would report my findings. Set-up: Unlike the 700, the 701 allows input of separate distances for your surround speakers (the 700 did the left/right surrounds as a unit for distances). This new feature was advantageous as my left/right surrounds are at different distances (right surround is 8 feet from my main listening position, the left surround is at 11 feet). Another difference is that the 701 allows you to input your subwoofer distance. I'm pretty sure that there was no such setting at all on the 700. In speaker calibration, the 701 automatically sets the volume of the receiver to 82 when you push the test-tone button (or 0 relative volume). Although you can then change the volume level for the test-tones, the manual suggests that you use this volume level (82) to set each speaker at 75 db (using an spl meter). In the 700, the volume remained at whatever you had already set on the receiver when you hit the test-tone button. Also, the 701 uses "pink noise". I believe it was "white noise" in the 700. Not sure of the difference, but I did notice a difference in the sound produced. I believe the test-tone functionality differences are a result of the "THX select" badge on the 701. The 700 is not a THX receiver. When calibrating my speakers (Paradigm Atoms for fronts and surrounds, Paradgim CC-170 center, Paradigm PDR-10 sub), I found a slightly odd result for my surrounds. Despite the distance differential, my right and left surrounds turned out to be calibrated at the same setting (+2 db). I would have thought my right surround (closer to me) would be at a lower setting than my left surround. ??? Perhaps room acoustics explain the difference -- but the 700 calibration using the test-tones did not show these results. Interestingly, in order to have the subwoofer output on the 701 to be about the same as the 700 (I like my sub to be about 5 db over my other speakers), I had to bump up the gain on my sub from about 11 o'clock to close to 12 o'clock (if you are looking at the dial like it is a clock). At my old setting with the 701, the spl meter reading was only about 2 db over my other speakers. A notable change in input set-up, is that there is a new value called "last used". So you can set an input to remain at the last used value for a sound mode, rather than whatever you initially set-up the input to use. There is a hardware preferences set-up option (not on the 700 at all). The most intersting aspect of this was the ability to change the volume read-out from Absolute value (0 -- 100), to relative value (-81 to +18). Sound/performance: I definitely notice a difference in sound with the 701 over the 700. There appears to be more clarity and a wider sound-field overall (better separation). I particularly notice this in dialouge (the center channel) and in the surrounds. Dialogue is more easily understood. I think most of the improvement is in the high end. In fact, I noticed addditional sounds in some DVDs that I hadn't heard before. This was noticeable in the American sub explosion on U-571 (when it is torpedoed), where I could hear individual aspects in the explosion that I hadn't heard before. With the 700, it was more like just one big noise. Also, in Lord of the Rings (Fellowship), shortly before Frodo gets stabbed by one of the Ring Wraiths, he pushes away with his feet from the approaching Ring Wraith. With the 701, I hear this push-off against the ground as a high-end type noise (almost a squeal). I did not hear this at all with the 700 --- at first I thought this indicated a problem with my center channel. However, I turned off my center channel and still heard the same sounds in my left/right speakers. So I think the sound is supposed to be there -- just not heard with the 700. So I definitely think there is a clearer high-end, allowing me to hear things I hadn't hear before and/or a less muddy sound overall. (not that I ever thought the 700 was muddy though). As far as the bass, although the sub gain is set for 5 db over the other speakers (as it was with the 700), for some reason the bass has more impact now. It feels more powerful than the 700 (although I had to turn the gain up higher in the 701, to get the same db output). I may set it back to 2 or 3 db now (relative to my other speakers). I did try the THX processing. For the most part, I did not notice ANY difference going back and forth between plain DD 5.1 /DTS and THX added to it. This was whether re-eq was on or off for THX. (You can set re-eq separetly for THX and for non-THX). On one DVD, "The Last Waltz", I did some high end (mainly crowd noise from the live performance) chopped off with THX processing. I decided that I will rarely if ever use THX processing, as generally I noticed no difference, or I thought it cut-off too much high end on the one DVD. To me there didn't seem much of a reason to use THX on top of plain dd 5.1 or DTS. One other aspect I noticed was "Dialog Normalization". When some DVDs are first spinning up, a "Dialog norm" message appears on the receiver indicating + or - a certain amount of db. I.e, dialog norm: +4 db. This was not on the 700 -- but it is on the 701. Probably related to the THX Select status. From what I understand, this dialog norm feature changes the db output of the decoder (internally) so that every DVD will have about the same volume level, assuming you use the same volume on the receiver. For example, when I put in the Monsters Inc. DVD, the receiver flashes "dial norm: -7 " . I think this tells the internal decoder to RAISE the output (internally) by 7 db. With the 700, I had noticed that I had to raise the volume on Monsters Inc. pretty far above most other DVDs. For example, I generally watched DVDs at a volume setting of 62 on the 700, but at about 68 for Monster's Inc. Now, with the dial norm feature on the 700, I did not need to raise the volume above my other DVDs. 62 or 63 seems right for just about every DVD (including Monster's Inc.). This seems to fit right in with the -7 db dial norm reading on Monster's Inc. Also, I think, but have no way of verifying, that the 701 also automatically uses a +4 db dial norm setting for DTS soundtracks. This is to compensate for the +4 db loudness of DTS tracks over DD 5.1. Although I do not see any dial norm reading when I start up a DTS soundtrack, I noticed that, where with the 700 I generally had to set the volume level a few ticks lower for DTS, with the 701, I did NOT need to do that. I believe this 4 db attenuation is standard with THX select receivers (but I'm not sure on that). So basically the dial norm feature allows you to keep a pretty constant overall volume setting for any DVD (assuming the same volume setting for the receiver). Note however, there is no way to turn off dial norm with the 701. Basically the dial norm read-out is informational. There is nothing you can do to turn it on or off. In general, I find the 701 to have some very nice improvements over the 700 -- in both sound/performance and general functionality. I don't know whether it is the newer chips in the 701 or the THX select hardware/tuning -- but there is definitely more clarity and a wider sound-field (particularly with the center and surround channels) then with the 700. Although I wouldn't have ditched my 700 to purchase the 701 out-right, it certainly is worth a trade-in (or even swap if your lucky like I was).