I've done some concerts with the Canon 7D and used the 70-300 IS USM F4-5.6 lens for this out door show go here:
This video was done hand held. I used both the zoom and auto focus (where the scenes get white for a split second is the auto focus). I had no issues as Rita moved around on stage. I was fairly impressed with the overall outcome except the sound. To keep the camera stable, I recall sitting with my legs folded and elbow tucked in my belly.
This concert of Bachman-Turner was also hand held and I used the 15-85 E-FS F3.5-5.6 Canon Zoom Lens
In the future I will use a tripod or monopod as after awhile it does get burdensome on the wrist. I've also since acquired the H4N Zoom for audio. The built in audio mic is a joke on the 7D as well as the stereo mic accessory. The H4N audio track can easily be synced up with the video using proper software such as Adobe Premiere. You can use the main audio track as a guide if need be until synced.
PS - stay away from the 1.8 lens. I had the same initial thought as you and decided to go for the better made 1.4 lens which is worth it IMHO (the 1.2 is overpriced for almost the same quality as the 1.4 - see photozone.de for more insight. the 50mm is fairly soft on larger apertures especially around the corners - I had to Lens Align mine to sharpen it up a bit as it was front focusing. I've only used the 1.4 minimally for video and prefer the 15-85 for most video shooting. - Hope this helps