I consider myself pretty good at packing a trip in - but after being is Israel this past summer will agree that only having 7 days means you need to make some decisions/cannot see everything. Also - do you really have 7 days, or does that include the arrival and departure day? If that includes arriving and leaving - that could mean you really have just 6, or 5 days for seeing stuff?

We arrived on a Saturday afternoon - so had one night in Tel Aviv and then drove around a few places the next day (Sunday) on the way north (went to the Palmach Musuem, which was a great intro to Israel). Staying one more day in Tel Aviv would have been better - in fact we did a day trip back to Tel Aviv from Jerusalem to see Jaffa, hit the antique markets, and see a few more things (i.e. hit mini-Israel) on our last day (Day 11). But a night - full day - night - and leaving Tel Aviv day #2 is plenty of time there.

Our route from Tel Aviv took us to Haifa on the way to Tiberius. Day 3 we did the Golan Heights and Day 4 we did Safed and a few other places up north. There is a lot of cool stuff up there. With the 3 year old, I would skip Safed, so you could get down to 2 days total.

We did one day driving from Tiberius to the Dead Sea (drove down the west bank, stopped at Qumran, then hit the mud), slept in Dead Sea, woke up the next morning, went to Masada, and then drove to Jerusalem. That was plenty of time and we got there early enough to walk the old city a bit before things started closing.

Jerusalem is the place to focus. We did one day of the Old City (markets, route of the cross, Kotel tunnels); one day driving around all the edge cities and neighborhoods, the main market, etc; and a day of Yad Vashem and a few other musuems. So you can fill 3 days easy and more if you want.

I went to Eilat - had a nice time - but would skip it with such a short time (and might skip it in general unless you did what we did, which was continue to Egypt).

Here is how I would break it out assuming your 7 days do not include the arrival and departure:

Day 0 Arrive
Day 1 Tel Aviv
Day 2 Tel Aviv - Tiberius (see stuff along the way)
Day 3 Golan Heights/Sea of Gallilee sights
Day 4 Tiberius - Dead Sea (spend afternoon at spas)
Day 5 Dead Sea - Jerusalem (Masada in the morning)
Day 6 Jerusalem
Day 7 Jerusalem
Day 8 Departure

If you have less days, then I would cut the Dead Sea and just do Masada as a morning day (1/2 day) trip from Jerusalem.