The Sony Alpha NEX-7 can produce some excellent photos, though like most of its competitors, it overdoes the in-camera processing for JPEGs.
The Sony Alpha NEX-7 produces clean JPEGs through ISO 200, and if you look closely you can start to see noise-reduction artifacts starting at ISO 400 (look for halos on the text at ISO 400 and the beginning of detail degradation on the tape measure at ISO 800). That's not to say that the camera produces noisy photos; on the contrary, it generates relatively low-noise images up through ISO 1600. It just overdoes the processing.
Even at ISO 400, the JPEGs show a combination of too much luminance noise reduction (which blurs) and oversharpening, which results in a type of artifact that makes it look unnatural. You can tell the camera is fixing the fringing, as well. It's too bad, because the raw shot has relatively little noise-reduction applied--it doesn't really need it. Though the camera has a setting for increasing or decreasing the NR, you can't set the ISO sensitivity at which it kicks in (and the documentation doesn't tell you what it considers "high ISO").
(1/60 sec, f2.2, AWB, spot metering, 24mm f1.8 ZA lens)
This demonstrates the advantage of an on-camera flash that can be tilted. While the proper exposure is probably somewhere between the two settings, using the flash indirectly preserves more depth in the image and lessens the harshness of the light.