All other things being equal, the answer depends on how large a print/display you want.
If you are planning on 8x10 and smaller prints, or a monitor resolution no larger than 1024x768, then save your $40 and go for the 7MP camera.
If you want prints larger than 8x10, or a display greater than 1024x786, the extra resolution MAY be worth the money.
On the other hand, bigger is almost always better, if you can afford it.