download cm7 rom .zip, and gapps .zip provided in OP.
You want to make a nandroid backup with rom manager or recovery, then in recovery wipe data, clear cache partition, and clear dalvik cache under advanced, and i would also format /system under mounts and storage.
next, while still in recovery, select install zip from sd card, select choose zip from sd card, and then find the cm7 zip you downloaded and select it - let it load, and when it's finished, select install another zip or whatever it says, then find the gapps .zip, and install that.
then you can reboot system now, allow several minutes for everything to load up the first time and settle in, and you should be straight.
for more info on how to flash roms and make backups, check out the [guide] stickied up top written by cyber warrior.
additionally - what radio are you currently using? if you are not using an MR2+ compatible radio, you will have to download and flash one. the radios taht work with the current version of cm7 are MR2 Official, MR2 leak, MR2.5 Leak, and Chingy's GB Leak. If you need to update your radio there are instructions in cyber warriors thread on how to do that as well.