One of my co-workers has had a discussion with Axiom's customer service about the issue of 5.1 vs 7.1 and speaker placement. For his room, Axiom has recommended not going with 7.1 because of the seating area's proximity to the back wall. I've had good luck with both 6.1 (old house) and 7.1 (current house), but in both cases my sitting position was at least half a dozen feet off the back wall and I was able to place speakers on that back wall. In general, I think that 7.1 setups are at their best when the listening position is toward the middle of the room and the surrounds (all four of them) can be a little way back onto side and rear walls.

Rather than give up, though, there are some alternatives to kick around. M&K makes a " column surround " speaker that is designed to go directly behind the listener and fire straight up. It's not likely to be as optimal as a more typical surround speaker and they're on the pricey side for surround speakers (assuming you pay at or near list price), but at least a couple folks around here have used them and had good results. If you already had a couple bookshelf speakers hanging around that you could experiment with, you might try setting them up so they fire straight up with the front baffle around the same level as the back of the couch and give it a listen. Speaker stands would be a bit tricky where the area behind the couch is visible (RedSIinPA's case) and it's a rather non-conventional approach, but it's not going to hurt anything to try.