Pros: Superlative imaging, accuracy and transparency, generous sound stage, comfortable to wear
Cons: Expensive, its accurate sound is what some object to as the Sennheiser "veil"
Designed to fill the gap between the HD 650s and the flagship HD 800s, the new HD 700s essentially share the status of flagship top-of-the-line headphones with the 800s. The open 800s are superb dynamic headphones featuring spatial accuracy and unparalleled imaging. Their innovative design uses a large "ring radiator" driver that is positioned a bit forward of the ears and then angled slightly backwards so that they deliver a more planar wave front. That modified acoustic wave front is the source of the 800s improved imaging as it more closely mimics the way we actually perceive sound. Listening to orchestral music, for example, produces an often uncanny sound stage of depth and breadth that enables you to position each instrument with impressive accuracy as to spatial location. The timbre of each instrument is likewise accurately reproduced, making the 800s the headphone of choice for recording purposes if accuracy is the major criterion. But all of this spatial and acoustic accuracy comes with a price. Some listeners find the 800s to be overly accurate, too acoustically detailed, too "analytical" in its approach. There is a slight increase in frequency response at 7khz during the otherwise nearly perfect treble roll-off, which may be the source of that perceived aggressive accuracy which some have found fatiguing. My listening experience has not found them problematic but nearly perfect in their ability to reproduce almost any given recording. The 800s are well engineered for reproducing instrumental and vocal music recorded with "passive" techniques, that is without the added distortion, compression, coloring, bass or brightness of many current popular music recordings. Headphones like the Audeze LCD-2, with their potent bass and fast response, may be more attuned to this variety of popular music.
The reaction of some to the 800s may be why the new HD 700s were created. They have a slightly warmer, more gemutlich (congenial) sonic approach. Their spatial imaging is nearly as well focused as the 800s but with an acoustic signature that sounds less analytical, more "analog" in comparison to the 800's slightly more "digital" quality. What some perceive as the 800's incrementally brighter treble seems to have been modified a bit, creating a more rounded and even plumper (in a good way) upper range. To my ears the HD 700s sound less aggressively realistic and more "relaxed" in reproducing treble. Their musical accuracy remains excellent. Listening to Mozart, for example, their sonic quality matches the elegance of the music note for note. Mozart's transparent orchestration for the Piano Concerto No.17 is reproduced by the 700s with comparable transparency. The qualities that struck me while listening were their transparency, elegance and musical warmth. To my ears, they possess the best attributes of a cross between the older HD 600s, with their natural and relaxed presentation, and the HD 800s, with their superlative imaging and generous sound stage. My guess is that the slight rise in frequency response at 7 khz, found in the 800s, was significantly reduced while engineering the HD 700s.
The bottom line is that the HD 700s boast nearly the same spatial accuracy and imaging capability as the flagship HD 800s. With good source material the 700s create a palpable sense of true-to-life acoustic presence. Bass reproduction is crisp and punchy. Mid-range is vibrant and clear. Treble is crystalline and sharp without a hint of auditory fatigue after hours of very comfortable listening. I noticed no obvious sibilance, though older mono recordings did manifest some distortion in the treble. These headphones are superbly musical. In my experience, only the much more expensive Audeze LCD-3's approach them (amongst non-electrostatic headphones) in reproducing the richness and life of the musical spectrum. As with all of Sennheiser's top of the line dynamic headphones, you'll need a headphone amplifier in order to realize their full potential. Without an amp to drive them the 700s sound slightly anemic and generic. With an amp they seem to bloom like the desert after a rain storm, coming alive and adding a sense of urgency to the music. Even if you already own a pair of the 800s, you may still want to audition the 700s. Their "relaxed" upper range mitigates what a small minority of listeners have occasionally found tiring in the HD 800s: their relentlessly accurate and analytical acoustic approach. The HD 700s reproduce music with a natural, burnished warmth and non-aggressive clarity. Their substantially lower price than the 800s make them a bit more enticing when considering value. The Sennheiser HD 700s are a solid choice amongst many available options. They are not better headphones than the HD 800s, just different with an appealingly natural approach to music. The two models make an interesting complementary pair at the peak of Sennheiser's price range. The HD 700s will definitely appeal to audiophiles.
[An addendum added July 7, 2012: Several weeks of further usage have yielded some additional observations. The HD 700s have a very broad dynamic range, a frequency response between 10Hz and 42kHz and a sound pressure level of 105 dB. Music can get loud very quickly. Your listening levels should be on the conservative side in order to safeguard your ears. Their impressive range and sound pressure level also means that they can literally "turn on a dime", supporting the HD 700's faster and more aggressive response to musical dynamics. They are an excellent headphone for Rock, especially impressive with music that features more complex mixes. Bands like Genesis, Tears for Fears and similar groups, whose music reflects countless studio hours, sound exceptionally vivid and exciting. Music that had previously been obscured by multiple layers of sound is suddenly audible and distinct, adding immeasurably to the pleasure that headphones uniquely provide. Sennheiser includes a 3 meter long Kevlar cord that arrives kinked, stiff and unwieldy when first removed from the box. Straighten the cord and leave it out for a day or two so that the kinks and knots disappear. Kevlar, used in bullet-proof vests, is intrinsically very thick and heavy. The cord is quite well behaved following this simple procedure and proves itself solid and robust. The relatively light clamping force of the HD 700s induces the wearer to shift the headband forward, which accentuates the sound stage produced by their angled transducers. The intention is to mimic the placing of front speakers. The depth and breadth of the resulting acoustic image is striking.]