Next step in upgrading my home theater system??

adding external amplification is likely going to be a big sonic step from your foundation, pressently. The amps in those receivers are pretty well compromised, and you'll double the sonic abilities with a better amp! I'd look at used Parasound HCA1205 for those speakers and receiver combo. The Rotel does offer good bang for buck however, but the Parasound is better sonically, and can be had for cheap used, if you look around.
Also, you should be running the speakers as "small".
You can indeed improve your sonics with better speakers, but you're changing your whole foundation here. I like simply adding an amp (necessary anyway, IMO) first. Then, try bringing home some better music/ht speakers (pair) and see what improves. Then, you can change the speakers out later if you like, and sell the B&W's.
Also, with speakers, remember that Dappolitos, horn speakers, and other more "controlled dispersion designs work better in less than very carefully considered and well set up acoustical spaces! Depending on your setup, yes, better HT/music speakers might be in-order for your room - but I don't know your room! (note: typical stereo speakers like your B&W's will not perform so well in rooms with low ceilings, where you sit further back, proportionately). Otherwise, speakers that might be in order for affordable consideration for you would be more music/HT designed NHT M5's, Paradigm Studio Dappolito center/monitors, and similar.
Hope this helps

"General rule of thumb in my book, is that speakers yield a much bigger bang for the buck than amplification." (BobR)

Indeed, I agree with Bob here, BUT, problem is you already have a complete setup speakers and a receiver. I think the EASY step, since you have a foundation already is to simply try seeing what more of a separates approach yields, and do what other here recommended and hinted at - which is to add an amp, yes!
Part of the issue here is that receivers are limited in dynamics and power distribution, mostly. So substituting better speakers (potentially), with maybe the same or even less sensitivity and efficiency - while they may improve many aspects of your sound - will still be left dynamically restricted if you're using the same inept receiver to drive them!! Get my point?
So, yes, I like you adding an amp here first. STILL, I'm strongly recommending that you configure your speakers as "small" or 80hz! (key is making sure your speakers and seats are set in the right place so that the speakers and sub are coupling well at 80hz reigion, so there's no "hole in the middle" sound you get with speaker/sub combo's)
Another issue here is, yes, acoustics. You are DEFINITLELY compromising your immaging, detail, soundstage solidity, transient attack, and overall dynamics when you are hearing too many first order reflections from your listening seat. And, with your speakers you're using, and how far back you sit, how low your ceiling is, etc, you are compromising your sound, somewhat. That should be adressed.
More controlled dispersion speakers should be used, ultimately, with multiple mid/bass drivers, possibly multiple tweeters, and more "movie oriented speaker designs", etc - ideally.
Your options right now, which will help greatly, will be to either put some absorption on the reflection point on the ceiling between you and the listening seat, or add diffusion there. your only other options, if you can't change speakers (although turning your speakers up-side-down will help control your ceiling reflection somewhat with your speakers), the technology offered in the Denon, Onkyo, Integra, and Sherwood receivers in the "Audyssey MultEQ" room correction device, helps solve all these type of acoustic problems! For your Yamaha (which only corrects bass modes with it's EQ), this isn't a benefit.
So, all I'm saying is that these sort of things all add up to pull down your sonic experience. That's all.
Also, sitting closer to the speakers helps you heare more "direct sound", increasing sonic quality.
If I were you, I'd try placing some acoustical foam on the ceiling, in the spot(s) where a mirrored reflection on the ceiling can see your speakers from your chair(s), to see what I'm saying. I think you'll find the sound quality change dramatic!
Anyway, i'd try amp first, then tweak a little - maybe try inverting your speakers, also. Infact, I personally would be getting a VERY NECESSARY Radio Shack sound level meter, a test tone disc or two, and finding out what the measured response is from ALL your speakers and sub from the listening possition(s)! This is a basic step from proper system setup. If you don't get rid of the bass humps and holes you and your speakers are place in, and get relatively flat response as a foundation, you can forget about getting high fidelity, accurate sound! - just won't happen.
Anyway, If you don't want to do that kind of stuff, something down the line for you to consider is to upgrade into the Audysssey pre's and receivers! While it won't get you or your speakers out of "holes" in the sound, it will do wonders for acoustical problems. This is ANOTHER LARGE improvement in your systems performance. Research is more and more available in reviews with the Audyssey products.
So, amp first, then some easy tweaks. I'd then look into other speakers, yes, in the near future, as budget allows.
Then, also better preamp technologies and processing will do wonders!
good luck

All these variables add up to more ingreadients in the recipe! The more attention you pay to the variables affecting what you hear and how the system performs, the better the end results. That's the bottom line - maximizing your experience with what you can put into it, IMO.
An option in the future, should you want to stay with B&W (I sold the product for years, and they make some nice pieces - although I'm not really into B&W's pressently), is to consider their older THX stuff, or even using their dedicated center channel models for L/C/R's! This would increase sensitivity and efficiency likely (higher efficiency often means potentially more dynamic headroom), and you'd be using their Dappolito designed speakers, which would limit floor to ceiling reflections (if you have the speakers arrayed vertically), and get dual mid/bass woofers (like dedicated movie speakers), which increases dynamic efficiency - as well as frequency reinforcement, and likely stronger imaging. Using their basic stereo speakers (one mid/woof and on tweeter on top), in a passive design, limits dynamic capabilities a bit, softens focus and transient reinforcement (that's why multiple driver speakers tend to let you place them further appart, and still maintain a solid immage, have strong dynamic contrast, help cancel out distortion between partnered drivers, often have higher power handling, etc). Basically, certain designed speakers do better at portraying strong dynamic recordings from digital movie tracks, IME.
Anyway, hope the amp mates well with your Yamie, and the rest of your wires and gear! Let us know what improves - even what turning the speakers upside down (for the moment?) does to your perceived sound.