A wallpaper for your computer is basically a desktop background image. Once you specify that wallpaper, it's static and doesn't change until you manually change your desktop background again.
A Windows theme, on the other hand is a combination of pictures, colors, and sounds on your computer. It includes a desktop background, a screen saver, a window border color, and a sound scheme. Some themes might also include desktop icons and mouse pointers.
Just as you can create your own wallpaper (all you need is an image), you can create your own Windows themes, too. To create a whole theme you would add a collection of images, and then specify the window colors, sounds and screensave.
You can save the time and hassle required to create your own themes by downloading those created by others. Just do an internet search for Windows 7 themes. That search will probably return lots of sites supplying free to download themes. Theme files have the file extension .themepack, and it's a doddle to install them. Once you've downloaded a "theme pack", all you have to do is double click on it to run it and Windows 7 will recognise it
And believe me - there is a whole host of themes available. I've just installed one on my laptop that displays high resolution images of luxury chocolates. Yummy!