My whole family uses the Canon SDlxxx line, and we all love it. We own a sd400, sd500, and sd550. If I am not mistaken, the sd700 is identical to these, except it is 7MP.
With that being said, I love these cameras. They are easy to use, small, durable, and produce excellent quality pictures. It is very easy to transfer pictures to a PC, and the standard battery life is quite good. It also takes movies with sound, which is a nice touch. I am always getting compliments on my camera.
The only thing I do not like about them is the zoom. The digital zoom is useless since it pixelates the image, so you only get a real zoom of about 3xs. On several occasions I wish I had a powerful zoom, but for normal use this camera is great.
So back to your question. Do you need a 7MP camera? If you are making standard 4x6 prints, a 7MP will show no difference compared to a 5MP. Even 5x7 will look nearly identical. Unless you plan on making lots of 8x10s or larger, a 7MP is kind of an over kill. So, if you are on a budget, pickup an SD550 for around $200-$250, and you should be very happy.
If you want to see the difference between 5MP and 7MP, most Circuit City or Best Buy stores have prints on display. I'll bet you can't tell the difference.