On your Itunes 7, select the songs you want to be included in your gapless album, right--click and select "Get Info" then below you'll see Gapless Album, left-click the drop-down arrow and select Yes. Then click OK.
After that, sync and you're ready to go with your party...
That process may be tedious as you select the file individually.
Here's what you need to do:
Select the song you want to have it mix "DJ style".
Right-clcik and select "Get Info". Under Options tab, check the Start Time and enter your desire start time in min:sec, e.g. 0.08 which means the song will start on the 8th second, not from start (0:00). Click OK.
Follow the procedure with the rest of the songs. Then sync it and you're good to go...