Yep. 7 is not too young - my daughter got one at 6 and operates it no problem. She loves it - the only present that has been played with every single day since Christmas. She gets free apps and free books, and rarely asks to buy anything from the app or music store. She connects to our home wifi and goes to several mom-approved websites.
I too recommend the 2 year warranty - Amazon customer service is a dream to work with, I had an issue with my kindle fire and they replaced it with a brand new one the next day- no questions asked.
I also recommend signing up for Amazon Prime. It is $79 (i think) per year. It gives you access to free movies and TV shows, one free book loan a month and free two day shipping on anything you order from Amazon. That's what I love the most about it, b/c I order tons of stuff from them. It paid for itself in no time in the 2 day shipping.