and a warm welcome to the forum!
To make it really simple: there are no "bad" DSLR camera bodies. They can all take award-winning photos in the right hands. As a general rule, the more you pay for a camera body, the more external control (as opposed to software menus with setting you choose on the LCD) you have and the faster it operates. Faster AF, faster start-up time etc.
The advantages of external controls are that you can keep your eye in the viewfinder and make your changes by feel only, in between shots.
Think of it as a form of convenience, if you will.
If you are going to dabble with flash, I would recommend getting a body that has master control of flashes (both 7D and D7000 does). Saves you a few hundred bucks for radio triggers.
From a pure image-quality standpoint, lenses have a lot more influence on the technical image quality: essentially how much detail and how sharp the image can be - and how much light-fall-off at the edges of the lens. But even more importantly, better lenses have larger maximum apertures (low F-numbers) which makes them more light-sensitive and allows them to throw the background out of focus for extra attention on the subject.
A great lens for family-shots and portraits is the Nikon 35mm AF-S F1.8, which comes at around $200-220. The 50mm AF-D F1.8 is also a great
choice for a little more reach and is less expensive at around $120.
If you want a do-everything lens, the Nikon 18-200mm VR, but it's not as light-sensitive and costs $600+ - so a lot really depends on your style as a photographer..what distances you like to operate on and what you want from your images.
I mentioned Nikon lenses - Canon has similar offerings in their lineup.
I don't think any non-professional "need" a Canon 7D or even a D7000 for that matter. The Nikon D90 is an excellent camera that essentially does the same thing for less. But do yourself a favor of handling them - there's much to learn from tactile impression of a camera body.
As for flashes: if you want mobility and use flash as fill in daylight, I swear to the Nikon SB-400, which is compact, fast and powerful enough for fill. Otherwise the larger SB600/SB700 models should provide you plenty of power for indoor shooting in less bright circumstances. Just make sure to reserve a few bucks for a diffuser if you shoot directly at the subjects - otherwise be prepared to always have to angle the light (bounce off wall/ceiling).
Canon's equivalent to the SB600 is the 430-model.
I'm just throwing fairly generic stuff at you here - everything depends on what's important to you.
In my personal opinion (and that's all it is), I would choose Nikon for portraiture/family shots for a couple of reasons:
- easier and more intuitive auto-ISO performance
- more skin-tone friendly color-rendition without customizing colors
- more automatic flash-exposure handling
But if I were a landscape shooter, I'd go for Canon for better micro-details/resolving power and a more neutral color-rendition out of the box.
I wish you the best of luck with your journey back into photography and hope to see some shots from you when you have pulled together your equipment