On the neighborhood. The other kids. The traffic. Your son's ability. Your son's maturity. Etc.
It sounds like he isn't a "pro" on his bike just yet. Believe me, he isn't the first to reach 7 and not be a bicycle extraordinaire. He will get there in time... but he isn't there yet. And I wouldn't be comfortable having him ride with the other kids just yet because of that alone. One quick swerve from one of the other "better" kids, and they can lock up tires and have a mess. But I'm a little on the cautious side anyway.
Our neighborhood is very quiet, and no speedsters that I am aware of. But it is a giant "C" and I can't see the road once they round the curve. I only let my 8 yr old daughter go around the loop with her older brother AND the dog (german shepherd). And then I carefully watch the time and expect them back in an appropriate length of time to make the trip. If they are just out riding for 30 minutes or something... she is only allowed to the stop sign and no further. If she is alone, only to the curve past our 2nd neighbor's house. And we know the folks in every house in the neighborhood.
But if there is a fall, it is a long way for me to run in an emergency... and too far for me to hear her crying. So they go together if going past the curve. That way one can come get me if need be. The likelihood of an accident goes down the better they get on the bikes, and the more practice they have.
I would tell my son (if I were you) that I am not ready for him to be out riding without me. (Not that he isn't able or you don't trust him, etc, but that YOU are not ready for it). Get him that new helmet (kudos for making him wear it) and go outside and ride WITH him around the block a couple days a week. In no time, he will have been coached through watching for cars in the roadway, backing out of driveways, doors opening on parked cars, etc, and you will have a lot more confidence in him being ok. Then you can base your decision more on the kids he wants to go with. Have you met their parents? Do they follow the 'rules of the road' when on their bikes? Have you seen them darting across the street in front of cars or misbehaving riding up other people's driveways? Let those questions be a starting point for whether you want your son to ride bikes with them. And when you do finally decide to let him give it a shot, give him limits. "yes, you can ride to ___ and back one time." "Yes, you can ride to _'s house and play for 30 minutes. Then you must come home." And since you may not have thought of this yet... be aware that once he starts riding with friends, he will want to be stopping and playing at friends' houses, too. So think about how you will want to handle that in advance. It sneaks up on you. (Be sure to meet the parents. I usually call over and say "so and so is riding over on his bike to play. I told him to be home at __ time. Give me a call if you need him to leave for home sooner/there is a problem/etc").