Re: If I have a firewall in my router do I need one installed in Windows 7?
What Redeemed said. It really isn't a performance hit on modern machines.
Plus... if someone jumps on your wi-fi or plugs into your router, and is infected with something that spreads... your router firewall isn't going to protect you because it only looks at traffic to and from the Internet.
I'm not saying firewalls do all that great of a job with malware protection... but it is better than nothing. If you don't want to pay for an AV product... you should be running Microsoft Security Essentials, as well... it is free and one of the better "free AV" products out there... and it doesn't impact performance much either. It also works in conjunction with the Windows Firewall for some Intrusion Prevention behavioral detection.