Reddit had a pretty fascinating post today -- scans of the first rules of ultimate, from 1973 and 1970. If you want to see how the sport began, take a look:
Interestingly -- it wasn't originally exactly 7 people; it's always been co-ed; it didn't originally have any sidelines, just goal lines (what?!) and it was allowed (but not required) to have referees for the game.
Oh, and games ran until a pre-agreed amount of time passed, or all the players on the opposing team died, whichever came first.