What are the differences (and maybe pros and cons) of KMS and MAK license activation for Windows 7?
Assuming that you are in an Active Directory domain environment with at least 25 computers on-site (or on your reliable, mission-critical WAN or VPN) running any combination of Server 2008, Server 2008 R2, Windows Vista, and Windows 7, you will want to use KMS.
Transitioning from MAK to KMS:
Computers activated with a KMS must check-in with the KMS once ever 180 days. If the computer isn't going to be able to communicate with the KMS (if it's, say, an off-site employee w/ no access to the LAN) then a KMS activation probably isn't the way to go.
After a MAK activation, no further communication with Microsoft is required. This makes it work well for computers that can't communicate to your KMS. A MAK key can be used a limited number of times, so if you have a number of computers (I believe Microsoft recommends KMS for 50 or more computers).
Microsoft has some official recommendations re: product activation, as well.