There's a funny help center article titled "Where did my buttons go?" which answers the most obvious question after installing Google Toolbar 7.
"You may have noticed that some or all of your Toolbar buttons have disappeared with the latest update of Toolbar. The newest version of Toolbar helps you focus on the features you use the most, by removing your less frequently used buttons from view. If you've recently used a specific Tool on your Toolbar, its button will be pinned to the Toolbar so that you have easy access to it. Otherwise, all buttons are removed by default. Don't fret -- you can easily add your favorite features back to the Toolbar. Click More next to the search box and select the tool that you want to add. It'll automatically appear back on the Toolbar."
So Google Toolbar features are less discoverable, users lost some of their preferences, but the toolbar is less cluttered.
Google Instant integration is not enabled by default, but you can open the options dialog and check "Enable Instant for faster searching and browsing".
For some reason, Google also installs Google Toolbar 7.1 for Firefox, which is an old version of toolbar and doesn't include the new features. The extension can be uninstalled from Control Panel, not from Firefox.