Until the PS3, the only advice that can really be given is based upon what we already know about the PS3. We could also throw in the Nintendo Wii to this, as it'll likely cost a third of the price and may be more suitable for a 7 year old, but that'll really depend on what your kids like.
The big problem you may have is that there's quite a difference in price at the moment, and also the games catalogue. The PS3 will be very young, and the 360 will have had a year of games out, but how many of those games are suitable for a 7 year old, I really don't know.
So if you're looking at it just for playing games, offline, you can buy yourself a memory card (~£12) and buy the Core 360 for ~£200, along with a game ~(~£39.99). If you go for the premium, you'll be paying up to £280, but will have a HDD with the system, making it more usable online.
PS3, that's likely to be costing £400-£425 for the 60GB version, and we're unlcear currently on wether the cheaper 20GB version is hitting the UK this side of christmas, and a game at least another £39.99.
Then you have a Wii, which will likely cost £150-170, plus games at a guess from £39.99 again, but will probably have the most entertainment for a kid, but that's a bit of a guess, as it'll vary from kid to kid.
You'll get every feature available from the PS3, but as you see, it's going to cost you, and it's going to be very new, with fewer titles available. In the coming years, we'll have a great mix of titles on all 3 consoles, but only a few sports games and You'll get every feature available from the PS3, but as you see, it's going to cost you, and it's going to be very new, with fewer titles available.