Now here's a question from me : Is it worth upgrading from PS7 to CS3 for $199?
It depends on what you use it for, really.
There's a bunch of small usability changes, as you've seen with the moving canvas beyond border thing you already mentioned yourself.
One major new feature are the 'patch'/ 'red eye' / 'healing' and 'spot healing' abilities -- which make up pretty much either a one-click or select & drag spot remover for blemishes and such. If you often work on portraits or want to erase objects from photographs then those are extremely valuable additions that will save you a lot of time.
There's also a bunch of niceties like a visual edge refinement dialog for selections (new in CS3)
CS3 also added a vanishing point plane editing mode, where you can freehand draw or clone-stamp in using a vanishing point persective
One very nice feature which I think was introduced somewhere after PS7 (could be wrong though) is PhotoMerge, which allows you to assemble panorama pictures simply by selecting a bunch of partial shots and sit back while photoshop automatically zoomes, rotates, overlaps and color adjusts all the images to automagically make a composite panorame image.
CS3 Extended added the ability to load and edit video frames into layers
another nice feature of CS3 (Extended?) is that it can do an 'average' of multiple images, effectively automatically removing moving objects, as shown here:
http://www.jnack.com/adobe/photoshop/fountain/
Is it worth it? Maybe so, maybe not -- impossible to say without knowing what you actually use Photoshop for. :-?