As long as you leave by 7:30 you should be fine.

I would count on 30 minutes to make it across Manhattan and then 20 minutes from the time you leave Manhattan to get to LGA, so 50 minutes total, but not more than an hour. Unless there's a fixed fare to LGA, I'd count on $40+ for the taxi ride.

My first choice would be Amtrak (admittedly, I like railroads), but you'll be close to Penn Station; my second choice would be to fly out of EWR. I cannot stand NY taxis so I am somewhat biased.

EDITED: Yahoo Maps says it takes 24 minutes. BUT Yahoo Maps also says that it takes 8 minutes to go from about 8th Ave. to 3rd Ave. in Midtown- that is way too low, and a NY Times story said that the average crosstown trip in Midtown takes about 24 minutes.