Mathematica 7 has no built-in support for graphs. You are probably referring to the separate Combinatorica package, which is described in the book Computational Discrete Mathematics. Do not confuse it with the built-in Graph
and related functionality introduced in Mathematica 8.
The function to use from that package is FromOrderedPairs
.
FromOrderedPairs[{{1, 2}, {2, 3}}]
(* -Graph[<2,3,Directed>]- *)
ShowGraph[%]

With this function, the graph edges are specified as a list of vertex-index pairs.
I think that using Combinatorica is quite difficult without having a copy of the book I mentioned above. There's some documentation that comes with it, but it's quite bare-bones.