How can I label with qgis 1.7, based on attribute and scale of map?
For example scale>1:1000 then label all those features whose area>100000 at font size 12 and those features whose area<99999 at font size 5.
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This can't be accomplished with a single layer as far as I know (as per Nathan-W's answer) but you can do it with two separate identical layers and scale-based visibility. I don't have QGIS 1.7 installed anymore (using 1.8 & 2.0) but this should work:
When you zoom out past the 1:500,000 threshold one layer and its labels disappears and the other appears; this is nice when combined with different sizes of line widths and symbol sizes, too.