Having used every version of Photoshop from 6.0 to CS3 (I haven't gotten a chance to try CS4 yet, though I'd imagine it's fairly similar to CS3), I can assure you that anything you've read stating that 7.0 is better than any version that came after it is a lie.
From what I've seen, all of the features from previous versions remain intact while new ones are added as you progress through the versions. The reason some people still prefer 7.0 is because it's the most recent version to use the old layout for it's options and tools. Since you're new to Photoshop though, there's nothing about 7.0 that would be better than a new version for you except maybe the price.
Price-wise, every new version is around $650-700 USD which is definitely expensive and that is the only reason I can think of for getting an older version. However, you need to ask yourself if you really need all of the features that the full version of Photoshop offers. I have also used Photoshop Elements and it contains most of the features of the full Photoshop minus some of the more advanced stuff (like batch processing). If you don't need the extra power full Photoshop has, Elements is a good alternative and will only run you $100 USD.