The LX7 improvements over the LX5 mostly have to do with interface and speed of operation. And maybe a slightly better sensor for higher ISO, but not a lot better. The aperture ring and the separate manual focus / ND filter control on the back greatly limits the number of things you have to control with the little clickable control dial (still the same as on the LX5). I used to find that frustrating because I'd sometimes forget which function I'd clicked the little control wheel to adjust, I'd turn it and adjust the WRONG function, and then have to go back and readjust everything to where I wanted it. With the LX7, I mostly only use that wheel for exposure comp, since both aperture and manual focus have their own controls now. The camera is quicker too - most evident in AF speed and write speeds, but probably there in startup times and other stuff. And the sensor seems to handle ISO reasonably well and 1600 in a pinch, while I was never good with the LX5 above 400. Oh, and if you want the EVF, the new one that works with the LX7 (and GX1) is WAAAAAAY better than the one that worked with the LX5 (and GF1)...
Other than that, very similar. Great sharp lens, wonderful multi-aspect sensor with the aspect ratio selector right on the lens, along with the focus mode selector. I don't think it lost anything good that mattered, but it improved in a few ways. None dramatic, but for $300, pretty much worth it. That said, now that I have a Nikon A, which is a good deal more easily pocketable than the LX7 and has WAAAAAY better IQ, I don't ever seem to use mine. Too bad - a great camera, but I think its been superseded...
-Ray