I am using a Panasonic Lumix fz1000 with a built in 25-400 lens.
Actually, no you're not. :) The Panasonic FZ1000 is a 1"-format sensored camera with a 9.12-146mm lens, which yields an equivalent field of view of a 27-432mm on full-frame format if you use a 4:3 aspect ratio.
Keep in mind, however, that this is a US$600 combination, new.
I am looking to upgrade to a better quality lens. Will a canon d7 with a 400 mm or 100-400
You do understand that a Canon 7DMkII body, and a 100-400L Mk II new would be roughly a $3200 combination? A used 7D and a used 100-400 Mk I would be less, but still probably well over $1000. And the optical and AF performance of the Mk I 100-400L is not as nice as the 400/5.6L.
... since it has IS and I generally like to shoot hand held ...
Keep in mind, too, that image stabilization is only good for mitigating motion blur from camera shake, not from subject motion. While it's a very nice feature for handholding supertelephoto lenses, if the bird is flying fast, you may be up and over 1/focal_length in your shutter speed to "freeze the action" and avoid wing-blur. And if it isn't, using a higher ISO setting can typically get you there, if you have enough light. In addition, a monopod is the form of stabilization you can use with all your lenses.
But then, I shoot BiF shots with a 50D+400/5.6L combination, so I'm prejudiced. :)
... to catch birds in flight, provide me much of an upgrade?
In terms of responsiveness and image quality? Maaaaybe. The FZ1000 is actually very impressive for responsiveness both in terms of AF lock and shutter lag (not to mention burst capability). But what you really have to consider is that the Canon dSLR combo will also likely be a downgrade in terms of convenience, being much bulkier, heavier, and more expensive gear than a superzoom bridge camera. What are you willing to trade off for the ability to use change lenses?
Also, your FZ1000's lens is f/2.8-f/4 max. aperture. The 100-400L's max. aperture is f/4.5-5.6.
Also, would the max zoom be any different?
Your "zoom" (the ability to go from a lower focal length to a longer focal length) will actually be less. The FZ1000's lens has a zoom factor of 146/9.12 => 16x zoom. The 100-400 has a zoom factor of 4x zoom. And the 400mm prime doesn't zoom at all as it's a prime (1x zoom).
However, what you're probably actually asking is will you have more reach/magnification with a 400mm lens on an APS-C camera, and the answer to that is yes. Significantly more. While you can get 432mm equivalence out of your FZ1000's lens, with a 1.6x crop APS-C sensor, a 400mm lens will yield the equivalent FoV to a 640mm lens on full frame.