You should definitely go for Lubuntu 12.04 Latest version as its practical System Specs clearly explained in this answer
If you just want to try Ubuntu 7.10 through Usb Drive from windows then try Unetbootin known to work with Ubuntu 7.10 here .
@Eduard, based on my experience, I don't think upgrading directly from Ubuntu 7.10 will work, because there are just too many releases in between them. Your old apt-get is probably not able to install the latest packages and perform all checks required.
I could think of doing incremental upgrades to 8.04(LTS), 10.04(LTS), 12.04(LTS) and 14.04(LTS), but ...
You can't resize a partition when you are using it.
So you have to use an Ubuntu Live CD, boot on it, and then do your operations from the Live environment. Eventually, you have to "swap off", that is to say turn the swap partition off by using Gparted.