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My reasoning, regarding small engines is that they tend to be rather gutless at lower RPM, so keeping them "on the cam" is advantageous. Another factor to consider is that when the engine is shifting, there is a moment there, where you are burning gas, but not putting down power. This is inefficient. There is also the weight penalty.
I would guess that for most cars, the optimum number of gears is 6, maybe 7. Anything beyond that is just showing off. In the case of manuals, I just don't see going to the 7th gear. It has to make shifting somewhat more difficult.
What do todays racers use in vettes/911s? I wouldn't be surprised if the use 5 speed race trannies, maybe 6. I doubt either use the 7 speeds unless it is some sort of showroom stock series.
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