I love the K-701. It's just a really classy phone for an amazingly reasonable price. But, if I were going unamped, I'd stick with the SR60. In fact, because I often do go unamped (I'm not a fan of portable amps), I sold my K-701 and have repurchased a pair of SR60s.
That said, in the spirit of fairness and candor, I should put a couple of cards on the table.
1. Like a lot of SR60 owners, I mod. Right out of the box, I Q-modded the pads to open up the soundstage. They're clearer without the fabric barrier of the comfies.
2. I opened up the backs and punched out the little holes covered over with fabric. This provided even more bass.
3. While the backs were open, I taped over the magnet plate with electrical tape. It's not as good as the sticky, goopy stuff, but it does something.
4. Slapping the backs back on, I took the pads off and removed the screen in the front, which eliminated another barrier between the driver and my ears. This removes a protective screen but I like the sound. There's more sparkle with the fabric gone.
One of the benefits of using the SR60 over the K-701, the HD800, the GS/PS1000 and others, is the lower profile. These are knockaround headphones that go where you go. Despite the retro Grado look, these are so diminutive that they don't become as big a fashion faux pas as the helmet headsets of the big boys. Since I'm just listening to the driver, anyway, I don't find the additional apparatus all that useful.
In fact, if you're going to be out and about, the K-701s will make you look like a space cadet. There's something sporty about the SR60's headhugging profile - even more so than the HF2. Lots of people have fled the K-701 after using it with the wrong music and thinking they could get the most out of it unamped. What made the difference for me was, ironically, the way they made me look. I can remember rushing into a small TV studio with them on and getting these freaked-out looks, to which I replied, "Will you validate parking for my space ship?" I've never gotten such looks with the SR60s.
5. The spaciousness of the K-701 can be duplicated with an SR-60, provided you slap on a $45 G-Cush pad. You'll immediately feel a loss of bass, which is what people complain of with the K-701. Here as there, you can fix that with a decent amp, especially one with bass boost. Of course, much of the problem will center on the music. Both cans work better with acoustical music, which has a mellow quality to it and where neither the high-highs or low-lows are so emphasized that you feel naked without bass boost or attacked by cymbal nazis.
But for the best of both worlds, unamped, the SR60 has it all over the K-701. Even if you don't punch out the back holes, tape up the magnet plate, remove the front grill cloth or Q-mod the comfies, the SR60 has better bass and a mellower presentation that is simply more flexible than you'll get with the K-701. Don't get me wrong; I love the K-701 and will defend it against detractors. I just think the SR60 is an amazingly unsung little hero, one whose full potential can be easily realized with some free-and-easy mods.
With the above mods, the SR60 has all the sparkle of the K-701, and all the bass it lacks unamped. It doesn't have the spaciousness of the K-701, but with the G-Cush pads, you can get there - for better or worse. Running my SR60s through an M^3 with STEPs and variable bass boost, I can tell you the bass potential of these cans is tremendous. I'd put an amped SR60, with jumbo pads and an amp, up against the K-701 with an amp. Both make very sweet music.
I think the differences between these headphones are overblown. The K-701 is basically a GS1000 without an air chamber designed to grab up as much bass as possible. Both phones operate on the principle that if you increase the ear/driver distance and widen the cushion to a circumaural fit, you'll get spaciousness with a vengeance. You'll also get stuck buying an amp to make up for all the bass you'll need to balance the presentation, which will sound hollow without it. If you turn an SR60 into a woodless GS1000 (by using the jumbo cushions), you'll have a K-701.
Make your judgments if you must.
Having sold off my GS1000 to a flipper, I'm contented with my SR60 and (get ready to gasp) like it better than my old HD650, my old K-701 and my old RS-1. The only expensive Grado I still own is the HF-2, which is too good to give up. But with the Q-mod, the removal of the front and rear filter cloth and a minimal damping of the magnet plate, I much prefer to run around with these SR60s. They're easy to drive. They're sparkly and bassy. They're lightweight, cutting down on ear fatigue. They're also low-profile enough to keep staring eyes off any space helmet. I like them better.
The only difference I'd try is the flats from Todd.