A couple of years back, after IBM bought out Rational, they re-branded most of their development tools from the WebSphere brand to the Rational Brand. Rational Application Developer (RAD) 6 and 7 are simply later versions of WebSphere Studio Application Developer (WSAD) that have been re-branded with the Rational name.
Support for WebSphere application servers (WAS) are also different.
WSAD used to support WAS 5.x
RAD6 supports WAS 6.0. You have support for JDK 1.4 but not for 1.5.
RAD7 supports both WAS 6.0 and 6.1. You can use JDK 1.5 here.
Having worked with WSAD and RAD 6 for around 2 years and having moved to RAD7 4 months back, I still would have preferred to stick with RAD 6. RAD 7 is not that unstable yet (Even with the latest patch 126.96.36.199). But we had a project that required features from JDK 1.5 and needed to be deployed on WAS 6.1. [ April 29, 2008: Message edited by: Sunil Vasudevan ]