It is common with sammy's memory chips to die out of the blue. Most of the times the EMMC chip just gives and it's done, sometimes the the internal mem hangs. There's no way to recover. I suspect it's HW issue induced by faulty Sammy drivers, it's been reported to affect some Android phones running leaked ICS also.
Also, maybe it's a downfall of the way WP7 handles physical mem. It only occurs when flashing or updating through hard reset. It's the eMMc that is only used then to format, partition and so on. There were a lot of hardbrick on the first WP7 update so all leads to Sammy.
Sadly, the only option is MB swap. As the Omnia7 is a late 2010 model, all the phones are covered by warranty. Just call a SC and when they ask you about the receipt, tell them that they should consider the date of mfg as the date when the device was made-they know that by the IMEI.