I would like to hear from someone who have used both of these cams. I would like to know how the picture quality of these 2 cams compare to one another.

If a person needs a "mic in" or a headphones socket, then the HC7 is the better of the 2, seen that the sd5 have neither. The SD5 seems like a nice cam for on the go video work and seems like a nice addition to the HC7.

I would like to hear your thoughts.

Haven't tried the SD5, but I would suggest the CX7 (might be CX6 depending on region) - share the batteries, lenses and filters. Pretty easy intermix as the optics/sensor are supposedly the same, although the CX7 does noticeably better with low light, so I suspect there are some differences.