I've heard a lot of people put a mattress on the floor next to their bed, or set the crib up next to their bed, then gradually move the baby to his own room a few feet at a time. I think keeping baby in your room for the first year is a great idea, so you're more aware of him.
I tried taking a rail off of my son's crib, converting it to a toddler bed, & I pushed our bed up against it. I had to make sure each night that it was pushed tight so that there was no gap. I tried for awhile to put him in his bed like a co-sleeper, but I wasn't that commited & it didn't work. We plan to put an air mattress next to our bed at some point.
He still wakes a number of times throughout the night at 2.75. We still co-sleep, but since most of his waking is before I get into bed, I know it's not the cause.
Just remember that MOST parents report there is something they'd like to change about their child's sleep habits. The "slept through the night at 4 weeks" baby is a myth! The fact that babies sleep as they do helps protect them from SIDS. About SIDS - it is due to UNEXPLAINED causes. A baby can be overlain, but this is not SIDS. There are SAFE ways to co-sleep. You probably know all of this after 7 months, but the people in your bed must not be smokers, under the influence of drugs or alcohol, or obese. You have to be careful about the baby's temperature (not dressed to warmly because of your body heat) and soft goods (when Milo was small I kept my blanket carefully tucked under me so that what covered me was not long enough to reach him and I kept it low enough on my body that it could not reach his face - I wore long sleeves if I was cold. My husband used his own blanket. I was also careful to keep my head to one end of my pillow with the extra behind me so that it wouldn't get close to his face, either.) We kept our mattress on the floor so Milo wouldn't get hurt rolling out, and made sure there were no gaps against the wall at the head of the bed. I did not go back to sleeping on my stomach, since I 'd gotten used to being on my back or side while pregnant & I didn't want to unconsciously roll onto my stomach. Milo liked to sleep nursing on his side, so I always kept him against my body so that there was no room for him to accidentally roll onto his belly. I also kept his arm, the one against the bed, in front of him when he slept on his side so that it helped prevent him from rolling.
(BTW, if you want to try putting something that smells like you in his crib, as suggested above, I'd just sleep with his sheets for as few nights before I'd put something in his crib).
The American Academy of Pediatrics has recommended against co-sleeping. Personally I feel this is not a medical recommendation but a parenting one, and I think it's out of bounds. Dr. William Sears, the Attachment Parenting guru, supports co-sleeping, which significantly influences breastfeeding. I find it sad that the AAP has stuck there nose in and made it essentially harder for moms to establish successful breastfeeding in a society where it is already challenging enough as it is to bf. Dr. Sears has a great website, askdrsears.com. Before Milo was born I heard Sears' son, another doctor, speak on co-sleeping. There are studies that show a decrease of SIDS in co-sleeping families because there is a greater awareness of baby. Even the AAP recommends that baby's crib be placed in your room.
If you're looking for reading material re: sleep, Elizabeth Pantley's "No Cry Sleep Solution" books are terrific (there is a baby version & a toddler version). I think Dr. Jay Gordon also has a well-regarded book.
Last thought - there is brain-based research that shows cry-it-out causes physical damage to a baby (you should be able to find this on the Sears site).
Good luck!
K.
Mama to Milo