...island hopping-too ambitious?

(Disclaimer: I have not yet been to Greece, so my comments are either from my own research or ones I received from others here and at other travel fora more knowledgable than myself on the subject of Greece). Keep in mind that each "hop" will require some or all of a day (especially if you include the packing and unpacking and checking in and out of hotels), so you will have less time on the islands if you limit the total number of islands. With a week, I would do no more than two islands-that would give you three full days on each one (or two and four, etc), with a transfer day in between. Regarding your list, you can visit Paros and Mykonos as a day trip from Naxos via the regular ferry, and Mykonos is also one of the day excursions from Naxos that fits into a single day (it is combined with a stop in Delos), so Naxos seems like a logical base. The Naxos-Folegandros ferry schedule would require an overnight, since there is only one per day in each direction (and are both at approximately the same time). Also, if you fly from Crete, you will have to fly through Athens no matter which island(s) you choose, so be sure to plan that time into your itinerary. You can theoretically take a ferry from Iraklion to the Cycladic islands (Chania ferry only goes to Piraeus), but it is 3-4 hours to any of the ones on your list, so a plane trip might save you time you could spend on an island. You might want to spend some time on the Aegean Airlines and ferries.gr web sites to get a better idea of your transfer options between Crete and the Cyclades (and betwen the Cyclades themselves). The booking engine for the main Greek ferry lines is here:

http://paleologos.forth-crs.gr/english/npgres.exe?PM=BO#RoutesTable

With respect to accommodations, Trip Advisor and booking.com are good resources for hotels-you can filter for specific results on booking.com, and the combo of the two will give you an idea of the hotel ratings once you focus in on the ones that have the amenities and prices you want. I basically did that for our bookings, then I checked back on various travel forums for more specific comments (good and bad) on our short list, then completed the booking.

Way too ambitious for 7 nights. Have you even verified that you can make the necessary ferry connections on the days necessary to reach all those islands according to your timeline? Cut it down to 2 islands after Crete so you can relax and enjoy your surroundings. Otherwise you'll be watching the clock and calendar at each destination.