Can I upgrade my Java to version 7, from version 6? I thought I have read that Java 7 does not work with Tridion CMS 2011, SP1?
According to the online documentation, the following Java versions are supported:
Content Manager (requires login): Java (JRE or JDK) 6.0, 32-bit edition (Java is only used for publishing and searching in the Content Manager)
Content Delivery (requires login): Java 6.0, 32-bit or 64-bit edition
As Eric says, Java 7 is supported (and recommended) in Tridion 2013 but not supported for Tridion 2011 (incl. SP1).
Java 5.0 will work with Tridion 2011, but is deprecated.
It may also be worth looking at DanielGLB's What versions of Java are supported and proven to work for Tridion 2011 SP1 HR1? question too.