Windows 8.1 is great as soon as you remove the metro apps and aren't trying to use them in a desktop environment. If you're clueless enough to do that rather than using it like you would always use a computer, then yes, it sucks.
Windows 7 versus 8.1, I would easily go Windows 7. But Windows 7 versus 8, I would go Windows 8.
8.1 has been nothing but a pain in the neck for me. Issues with Metro apps, inability for computer to sleep but will sleep at random times, a few infinite boot loops trying to update, as well as HomeGroup issues. I've tried every possible fix, but none worked. Zero of those issues in Windows 8 though.
It's a shame, as the parts of 8.1 that work do work better than 8 (side-by-side windows being adjustable, re-sizing Metro tiles, better customization, and for some reason, even the apps are different, like the Store and Microsoft Solitaire).
I would go with Windows 8, since you can still use that key to upgrade to 8.1 (and any additional 8.x updates) to check it out and see if it works correctly for you.
And according to this thread, that CPU would work with 8.1.