I would suggest a nice, mechanically sound, steel, road bike for that price. If you don't want to try drop bars, go with a hybrid.[/QUOTE]
i concur, a hybrid can work well for many aplications, most have braze-ons for front and rear racks which are great for commute or tour. the only downside that i've found is that the mtb groupo is a little small on the gear inch for me, when i first went out on a group ride i got dropped with a quickness because i was running a 22-32-42 crankset and now i keep looking for larger compact chainrings (aximoran?)
so check with lbs about all upgrade possibilities, most shops will trade out, at a small cost (depending on total amount spent), for others like drops for flats/risers, trigger shift for grip, barcons for downtube or combo shifters, etc...
research the suggestions here and in commutting and touring sections for more advice.
and remember that, for a $700 budget on bike alone, if they don't wanna work with you, go elsewhere.
but most importantly, find a comfortable frame that fits, you won't ride it if you aren't comfortable