I could have sworn that I read about people using this with Win7, that's what has been driving me crazy.
But Ok, do you have any recommendations for a drive caddy?
The USB 2.0 cradle in Windows 7 may or may not work, depending on the particular drive model and the speed of the Windows 7 system (there are timing problems in the cradle firmware). Older cradles won't work in 7 as they needed aftermarket drivers that don't exist in the Vista/7 driver framework.
Do you have any reason to run XP Mode (Virtual PC) in Windows 7? It might be worthwhile seeing if the cradle will be recognized when passed through from 7 to XP. But I wouldn't go and install XP mode if you weren't going to use it for anything else.