The Video Acquire Wizard in the Windows Live Suite is the default for importing in Windows 7. When the camcorder is plugged in and turned on in VCR mode, it pops up to start the importing process. The file created is a type I DV-AVI. When the import session is finished, Photo Gallery opens automatically and shows the thumbnail for the new clip.
Windows Live Movie Maker doesn't have the collections feature of MM1 thru MM6, it uses the Windows Live Photo Gallery as the collection library. You bring the clips into Windows Live Movie Maker as needed for a project.
This is the usual and preferred way to get video from a mini-DV camcorder into Windows 7. The Windows Live team uses the WLXVideoAcquireWizard in the Photo Gallery folder, something designed to work in Windows 7 (and Vista).