Check a couple of things. Is the gauge swatch done in stockinette stitch or is it in a pattern stitch? Are you knitting a good sized swatch (about 5" x 5") so that you can measure gauge accurately over the center 4 inches?
Pattern gauge is 5sts/inch. On the size 5 needle you get 6sts/inch. How many sts/inch are you getting with the size 7?
Which pattern in the VK winter 2008 issue are you making?
Yes, definitely try a size 8. Are you using a similar yarn to what's in the pattern? If you're not sure, let us know both what the pattern uses and what you have. But you should be able to get the 5 sts per inch with the 8s.