In WAS 7 you must defined the servlet in the web.xml:
<servlet>
<description>JAX-RS Tools Generated - Do not modify</description>
<servlet-name>JAX-RS Servlet</servlet-name>
<servlet-class>com.ibm.websphere.jaxrs.server.IBMRestServlet</servlet-class>
<init-param>
<param-name>javax.ws.rs.Application</param-name>
<param-value>YOUR APPLICATION CLASS</param-value>
</init-param>
<load-on-startup>1</load-on-startup>
</servlet>
<servlet-mapping>
<servlet-name>JAX-RS Servlet</servlet-name>
<url-pattern>/rest/*</url-pattern>
</servlet-mapping>
Also, WAS 7 isn't bundle with JAX-RS you should add the JAX-RS jars to your web module or add it as a shared library.