It was a marketing decision to go to the 7x7 numbering scheme because the 7x7 sounded catchier to the marketing department. See below.
Urban Myths:
Each successive middle digit represents a bigger airframe. Simply not true. The 727 was larger than the original 737, and the 747 is the largest of them all.
The 707 got its name because that is the sine of the 45 degree wing sweep. The only problem is that the 707 doesn't have a 45 degree swept wing; it is 35 degrees.
Billy Boeing is purported to have thought the number 7 to be lucky, thus virtually every model of Boeing made had a 7 in the name. If the company web site is to be believed, also not true. See below.
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