I've got the 700 SPS Varmint in .308. I've been very happy with it and every 700 I've tried in the past (ADL, BDL, and CDLs). Haven't specifically handled or read up on the XCR you're looking at, but I would think you would do well with it.
As far as which round to go with....it really comes down to how you want to use the rifle, which you think you'd get more/better use out of, and what round YOU want. Personally, my preference would be for the .308. I've always been a fan of the larger/heavier rounds, particularly when going out past 200 yards. Lots of commercial load combos, plus virtually unlimited reloading possibilities. That being said (and depending on what you're shooting at), there's absolutely nothing wrong with the .223 at that range with the right loads.