7.4v DC to 5v DC (with 1A and 2A options)
It's quite possible that the two series cells were discharged somewhat and together, instead of producing something like 7.4 volts in series, the voltage was below 7V. Once the voltage drops below 7V, a 7805 regulator will not work very effectively. You could try 3 in series but the 7805 could get hot due to it dropping maybe 5V in order to put 5V onto the load.

I would use switching buck-regulators for doing this job because they are more energy efficient and there is a three terminal regulator with exactly the same pin-out as a 7805 that will run much cooler and running it from 3 cells would be more effective. Link. You can also get a 2 amp version. From Farnell the stock number is 151-8685.