I am using windows XP, not windows 7, but I had a similar problem.
For me it turned out to be the "Creative control panel" that came with the sound card drivers. It was trying to dynamically adjust the microphone volume as I spoke and it always got it wrong. If I hadn't spoken for a while it would turn the volume of the mic way up, then when I started speaking it would turn it down as I spoke. I could see the level changing if I had the creative software open and tried to test the mic.
I ended up preventing this software from starting automatically and just setting the volume levels in the normal windows control panel.
I wonder if windows 7 has a similar feature that can be disabled?