At 7 years old, the main focus should be on teaching the fundamentals of the game, meaning basic fielding, throwing and hitting techniques. This is definitely not about winning and losing, and I would be surprised if you even keep score (although I guarantee the players will;).
How many players are you permitted to have on the field at a time? How many players are on the team? Is this tee ball, coach's pitch, player's pitch?
If you are allowed to have 10 in the field, play the infield with normal positions, including a pitcher and catcher and put the remaining four across the outfield. Make sure you rotate everyone in the infield and outfield. Again, at age 7, there is no need to establish "positional players", but rather the focus is on fundamentals.
If you can supply me with a bit more information on number of players permitted on the field at a time, I can be more helpful.