The answer really depends on budget. Logitech Driving Force Pro is apparently pretty good for under $100,
G25's are under $200 but not made anymore and getting scarce, G27's are G25's with some stuff
improved but still brand new and closer to $300. If they want to spend more than that, there's Ball Racing
Developments, and FrexGP (insane Japanese stuff, with prices to match). The forums at Sim Racing
Mirror Zone would be a good place to look for info.
As far as Win7 goes, I've installed it (64-bit) recently and am extremely happy with it. I've had everything since
DOS 3.0 and this is the best operating system I've used. Coming from Vista64 (which I actually liked),
everything* runs, and almost everything runs _significantly_ better.
*there are a very few things that just will not run in a 64bit environment, so I run a WinXP 32bit machine
virtually. Check out
http://www.virtualbox.org/