I'm not sure how your fire pit relates to the plan but can provide answers anyway. First, make sure your design adheres to local code, if any - fire pits are so popular these days, many municipalities have enacted code requirements for safety and environmental considerations.

I think your stone ring could work - you'd need a mighty hot fire to burst the stones - but the size described is a bit small, IMO. I'd be looking at something more the size of a basketball. Smaller stones tend not to hold their position as well as larger, heavier ones and if river rock type stones, won't stack easily. 16"x8"x8" concrete blocks are also commonly used for this purpose - not the most aesthetic but highly functional. Bespoke steel or concrete aggregate fire pits are ideal if costly.......and all look better if raised off the ground some distance (safer, too)

In a perfect world, the paving for the area would be what you prefer - flagstone, concrete, stamped concrete, concrete with rock or tile mosaic, gravel, etc. Both gravel and sand are perfectly functional and very economical. I would recommend using rigid edging (used for hardscapes) surrounding the area to contain the material - you don't want either to migrate into the lawn.

And make sure the area is large enough to accommodate whatever seating you envision as well as the fire pit itself and a buffer zone around it. Also consider the impact of the heat of the fire on any surrounding vegetation and site accordingly.

Nice description of the basics by Gardengal. I concur that the softball size stones are too small. They could only be nice if mortared together into something more substantial.

Thanks! I should have mentioned in my original post that I planned to use mortar to hold the rocks together.

sand's great if you want to know exactly how many feral cats are in the neighborhood and how well they eat :)

on the firepit, some sort of liner is ideal. It can be a steel ring or if it's a mortared application like you said, firebrick works really well.