how to cancel download of iOS7 on iPhone
You can probably back up your iPhone with iTunes and then restore that backup, and that should cancel the update.

Restore Back Up and not Restore iPhone

**There is another way too, which just worked for me: your iPhone can't install the update if it doesn't have the free space available, and this is a pretty big update.  You can simply copy a bunch of large files to your iPhone (e.g., lots of music or audiobooks) and the update will stop and you will get a message saying that the download cannot finish installing due to lack of space.  This essentially stops the update (and then you can go back in and immediately remove the big files that you moved on there).