What were your goals in creating NBA LIVE 07?
First of all, we wanted to make sure that we continued to innovate and deliver on current gen because we have a very loyal following for our current gen game. So our first goal with this version of LIVE was simply to create the best basketball game we have ever made.
Second, we felt like last year's game was really fun, but it needed to get more authentic and realistic without losing the fact that it was an absolute blast to play. The game needed to be a little less frantic, more strategic, and generally more like real NBA basketball.
What are the main improvements in NBA LIVE 07?
The second thing is that for the first time our players have a real sense of space and weight to them, and the way that they collide and interact with each other makes the game much more realistic, especially around the basket. Scoring in the paint feels completely different this year with lots of in-air collisions, adjusted shots, and players dunking on other players as opposed to through or around them. Scoring in traffic is much more challenging and because of this I find it is also much more rewarding.

"I like it becuase its challenging"
What enhancements have been made to the CPU's intelligence and strategy?
This year we introduced the concept of game intensity. The idea was to create a system where the 4th quarter of a play-off game felt completely different than the 2nd quarter of a blow-out in the regular season. The result is that each game has a fluid level of intensity that drives how CPU players play (how tightly they guard their man, whether or not they dive for loose balls, etc.). Note that this is different from momentum, which is team specific (you can have the momentum regardless of whether it is an intense game situation or not). Game intensity is shared and controlled by both teams and is constantly changing based on what is going on in that particular game.
We also made a bunch of AI changes and enhancements to make the game more strategic and realistic. We adjusted the game pace and spacing on offense, so everything feels less frantic and gives you time to call plays, maneuver in the post, and work the ball around for open shots on the perimeter. This doesn't mean the game feels slower though; one of the things that is key to NBA LIVE is an up tempo pace and fast game play.
Other improvements include true secondary fast break logic and an inbound play-calling system. Rebounding was completely overhauled, and we added more control to the passing system so the user (and CPU) can utilize lob passes, better alley-oops, and touch passes. Overall I think the CPU is much smarter and acts in a much more realistic way.
And the best one of all (credit to andrew for actually asking this question)
Have any improvements been made to the substitution patterns used by the CPU (for example, bringing on a power forward and sliding a player already on the floor to another position so the two can play together)? Are we able to set our own substitution patterns?
We have completely re-worked how we handle player rotation not only for the CPU, but also for user sim games. Basically we allow you to set playing time and starting percentages for each position, giving you much more control when you sim.
What a joke. No wonder pinoys love live so much. They can have that shit.