Developmental Toys: The ring stacking toy and stacking cups are great toys for the 7/8 months old. My son hasn't yet figured out the stacking cups, but he does enjoy knocking them down after I build a tower with them.
A few other things to try:
Dance Parties: (play your favorite tunes and let them dance around) OK so our 7/8 month old children aren't dancing around the room yet, but they will enjoy bopping along.
Flash Cards: (with colors, numbers and letters) our little ones are like sponges soaking up all of the information around them and while they won't be singing their ABC's anytime soon it never hurts to start familiarizing them with it.
Story Time: Reading to children at a young age helps develop good readers in the future. Right now my son is really into the touch and feel books.
What do you do with your baby? Any great craft ideas or art projects? Let me know!