Another important factor is whether your ARM is interest only? If it's interest only, then you might want to consider paying down some of the principal as you wait for rates to drop a little bit lower --that 5.67 rate appears pretty good these days.
The uncertainty you're trying to eliminate is a potential upward move in interest rates, which given the remaining 7 years left appears to be very likely, though the 1.5 percent cap is very good -- you sure it's that for the initial increase, as many ARMs have an initial adjustment that is above the subsequent annual caps? On the other hand, it's always possible for us to have a very prolonged period of lower interest rates -- though I doubt it will stretch for 7 years, unless we morph from recession to depression.
What exactly is your ARM indexed against? My ARMs are indexed against one year treasury constant maturities, which is at 0.95 percent as of 11/25/08, so the reset at the current index would actually lower my interest rates to 3.7 percent, a big drop from 6.0 and 5.375 interest rates. Unfortunately, I don't get reset until 10/1/2011. I'm looking to drop these ARMs if I can refinance at fixed rates below 4.5 percent, otherwise if I can't get a lower rate, I'm willing to float with the reset in 3 years and pay down a lot of principal until reset so that any major upward increase will be against a lower principal.
Someday this war's gonna end . . .