My partner and I are planning to take a train from Munich to Berlin and stop over at a few cities on the way. As it will be our first time visiting Germany for 7 days, can you please advise which is the best route to take and which are the cities and places that should not be missed?
You can visit Dresden, Leipzig, Bamberg and Nürnberg, in that order. In case this is too much, give priority to Dresden and Nürnberg.
The train ride from Dresden to Nürnberg via Zwickau is a scenic one. There are direct regional trains (Interregio-Express, IRE). The journey takes about 4 hours and 30 minutes. Worthwile stops along this route are Freiberg, Plauen and Zwickau.
If you are willing to temporarily leave Germany you can also travel via Dresden and Prague. The train ride from Dresden to Prague is also scenic.
Assuming that you have only 7 days in Germany overall (which your wording suggests): Berlin and Munich definitely deserve 2 days each. For the remaining time, I agree with Marcel C. that Nuremberg (Nürnberg) and Dresden are the most interesting stops, and can easily take up 3 days between them. All of these cities are connected by high speed ICE lines, so the actual traveling will take only a few hours each time.
Some alternatives: If you are interested in the history of Protestantism, then you might want to see the Wartburg near Eisenach, and Wittenberg. If you're into classic German literature, Weimar would be a priority.
I know it is outside of Germany but if you haven't gone before, I would highly recommend Prague. My wife and I stayed there for a couple of days as we traveled from Munich to Berlin and it was on our way. We also stopped of in Dresden as we went from Prague to Berlin.
Prague was one of my favorite places due to its history, amazing architecture and culture. As a bonus you get the true feel of an eastern bloc country just to add variety to your trip.
Look up Old Town Prague, the Charles Bridge and Prague Castle to get an idea.