I had a student that was seven and he started on a 3/4 acoustic. When he grew comfortable with that size, he graduated to a EB Sub1, which was perfect. Not a huge investment, but amazing quality and sound.
For the acoustic, he had a wechter travel guitar. That was ages ago, so I don't know how they fare now. Their travel acoustics at the time was GREAT for the price. KILLED Baby Taylors or anything of that sort. IMHO.
Start smaller imo. Got my son a Brian May MiniMay, it sounds fantastic and is surprisingly good quality (I steal it if I have to go on a business trip!) I also have an Albert Lee lined up for when he gets bigger
I started on a full two inch classical at 10. It depends. Different people say comfortable size is important and others say its imperative that they get used to full size ASAP.
If you're boy is just curious about it I'd say a beginner 3/4 doesn't sound bad. If its something he's willing to commit too ( hard to say at 7 but you never know) then I'd say start him off full size.
Are you looking for a classical guitar or an electric one ???
My daughter started to play guitar when she was 5 or 6 years old.
Her first guitar was a 1/8 classical guitar.
After that, when she was 8 or 9 years old, I bought her a 3/4 classical guitar.
When she was 11 years old, she started to use my full size classical guitar.
First, you should ask the teacher what he thinks. If he is used to teach young kids, he will know what's best for your kid. After that, keep in mind that you will have to buy a new guitar every 2 or 3 years. Thus try to find a playable guitar but not too expansive.