First, don't over-react. I'd say you've got about a 97% probability that what you're seeing is simply curiosity. Until you have some evidence to suggest that it's something else (and quite frankly, I'm not sure what else it WOULD be at age seven), I wouldn't get all hot and bothered.
I think taking away his computer privileges WOULD be over-reacting. I can't speak for you, but I would not want a child of mine to feel I was upset at them for simply being curious.
We ARE sexual beings, and we're curious creatures; combine the two, and you have sexual curiosity. In your shoes, I think I'd try to find out why he's interested in this, more than anything. Just be accepting, open, and answer his questions as best you are able.
I *can* tell you that it will continue from here on out. My son is 27, and that's about the age that he started showing signs of "sexual interest" in anything, and started asking lots of questions. You might want to consider investing in one of the software packages that regulates what a child may or may not watch.
Just keep answering, be open, and be sure he knows that you love him and that it's ok to ask.
Edit: Some of the responses on here remind me of a joke I once heard (a clean one...):
One day, a little girl wandered in to talk to her mother. She said, "Mommy, what is sex?" Mom got kind of flustered, and sat down with her daughter to give her the basics - birds and the bees, how babies are made, love, marriage - the works.
The little girl sat and listened for a while, and nodded when her mother asked if she understood, and when mommy finally slowed down for a breath, she said, "Mommy, I guess that's good, and I understand. But what does it mean, here on this card I'm supposed to fill out for the library, where it says, 'Sex'?"
Like I said - don't over-react...