Hi Ironman, and Welcome!
I believe 7.1 would work well in your room; if you have the funds I'd suggest to go for it. More and more material is coming in 7.1 these days, and when well engineered it does make a difference.
As for the height of the surround and backs, I heard both: ear level and about 2 feet above ear level. I like the ear level setup, but this is entirely up to you. You have to test it; as Tom pointed out, the beauty of the QS speakers is the they sound pretty good in almost any position.
