Are you using through regular copilot (the 'local' agent type), or through the separate claude agent type (which I believe you have to activate in your repository settings on github).
I had the exact same issues with the latter - randomly stops working, wipes chat history, just generally seems to be totally broken. But the former works totally fine and still lets you select sonnet/opus. My experience was before this recent 4.6 -> 4.7 change though.
Regular local agent. Seems like as soon as the context fills up (and it only has about 160k of context so that doesn't take much) it starts to fall to pieces. I even tried using opencode as a harness instead and it causes opus 4.7 to lose all memory every time I hit a compaction step.