P7s have certainly increased in price. As posted already, trade ins would sell for $550-$750 just several years ago. Somehow, they're suddenly in high demand and commanding high prices. I'm no great P7 guru, but most nickel finishes are not factory. I'm suspicious of any refinish (what it done for pure aesthetics or to remedy a problem?). Personally, I'd say a good condition P7 PSP is worth about $900. If it was determined to be a factory nickel finish, $1200 might be reasonable due to rarity. But frankly I don't think the refinish adds any value myself. So I think $1200 is quite high. But, people are apparently paying these silly prices, so what do I know?
Aside from price, my thoughts on the P7:
Ingenious design that can easily be argued as over designed. Until the Walther CCP (which isn't starting off too well), no one has copied/adapted the design. The grip cocking mechanism is unique and makes the P7 one of, if not the safest carry pistols. However, I have no use for a single stack carry, especially considering how compact pistols are becoming. As a range toy, it's fun, but after 4 mags or so at a moderate pace, the gas system makes the frame heat up to start being uncomfortable, depending on your grip style. The fixed barrel makes for it being a tack driver. The trigger is only so-so for what is essentially a single action. Kinda mushy. Mag changes aren't difficult, like say a P230/232, but they're not as smooth as you may be used to. Speaking of mags, they're astronomically priced. As the pistol wasn't a commercial success, there isn't much aftermarket for it.
Ultimately, I'm happy I have one in my collection, but I only got it because of its uniqueness, and because the price was reasonable for a used pistol. I thought $1200 was quite a premium for the P7M8 when I purchased my PSP...no way I'd pay $1200 for a PSP. It fires a 9mm projectile just like a ton of other firearms do, it just operates in a different way. But that's just me.