Yes, it means "generation", but if you have a late 2007 MB, then you don't have a "MacBook 7,1", but a MacBook 3,1, which you can find out via the way I showed you.
Thus you choose "MacBook (Generation 3) Family".
But if you want to save some money, buy somewhere else, as Apple is quite expensive for RAM.
It is 77 USD vs. 210 USD, that's a difference of 2.7.