I think that you're referring to the Taunton sleeping car fire in 1978. Twelve people died and repercussions had a huge influence on the design of the mk3 sleeper under development at the time.
https://en.m.wikipedia.org/wiki/Taunton_sleeping_car_fire
Anyway, noone other than the mad or very drunk would manage to sleep on a Class 700, so I think that being overcome by fire is the least of their worries.
Thankfully I don't have to use the ghastly things very often but I did post on the Thameslink thread a few weeks ago that I'd noticed that the cushion front edges were already starting to show signs of wear in a carriage that appeared to be brand new in every other respect. I half jokingly wondered if the squabs were so hard and sharp edged that they were causing this deterioration themselves but this brought a flurry of indignation about people putting their feet on seats etc etc. That would be a lot of feet very early on - I think that they might be wearing through just because they're fabric covered 'concrete' digging into passengers' thighs.
The Class 319 was a basic (and noisy) way to travel from Bedford to Brighton but was just about an acceptable compromise for the job it needed to do. The 700 almost feels like it's a deliberate attempt to demean and dehumanise its passengers, and I think that awful grey blue upholstery combined with the grey exterior and the grey everything else reinforces that. It's really quite dystopian, so just right for something stipulated by the DfT.
A trip on a 707 on the other hand is nearly always shorter and the SWT red doesn't insult the user in quite the same way as Thameslink grey. Even District Line trains feel more welcoming and comfortable than these things.
On the plus side, the WCs are great and the aircon is brilliant. Not praise that you could ever heap on a 319.
But those seats are an unnecessary punishment.