I don't see much of interest in Malaga. As the first reply noted, Ronda is a very pretty smaller city on a steep hill. Granada is a major art and architecture site, with a nice city and other history (literary and religious, for example) all around the rest of the city. Granada is the easy choice. I don't see how 7 people and excessive cruise luggage can fit into one car. Are you prepared to rent 2? Even if you could come up with an American-sized SUV, I doubt they'd let you return it in a different place than you rented, because it would be such a rare rental-car animal in Spain! And the luggage might not fit.
The problem is that Seville and Granada are in opposite directions. Spanish highways are good, but it's a long way. I don't suppose it really affects your question, but the time of year often affects some details. You didn't say.
Because Seville is a really nice place, I also agree that you might as well go there. We spent three nights in Seville on a long visit to Spain. If you feel like you got gypped on seeing Spain, rent a car locally and (after researching) visit Arcos or Jerez or Carmona (which is a respectable substitute for Ronda.) Not to overstate the stereotypes, the ladies could go to the horse show in Jerez, while the men taste Sherry.
I'm sure you got the lowest airfare you could, but it might have been better to fly into Madrid, which is good for a week of "seeing Spain."
