Apple recommends that you do the following things to prepare for System 7:
1) "Before You Install System 7" is in the Personal Upgrade Kit and the Group Upgrade kit. This stack describes features of System 7 and answers questions about upgrading.
Use the System 7 "Compatibility Checker" (a HyperCard stack), which scans your hard disk, checking the compatibility of your third-party applications, Control Panels (cdevs), and system extensions (INITs) against a database of compatibility information provided by the developers of the software. For the most up-to-date information, call the individual vendors of the software applications you use.
2) Upgrade to compatible versions of your application software.
3) Make sure you have enough RAM in your Macintosh (2MB is the absolute minimum; 4MB is strongly recommended) and that you have enough free space on your hard drive (at least 5MB).
4) If you use EtherTalk, upgrade your routers and EtherTalk drivers to Phase II.
For more information on the Compatibility Checker, search for "Compatibility Checker".