The number of breakpoints is restricted to 5 code BPs and one data BP. Additionally there is the function of "Go to Cursor" which acts like a BP as well.
There are 8 address breakpoints available in PSoC 3 and out of which 7 can be used by us. The other one is used by the creator for goto, jump statements etc. It sets the breakpoint, when executing these statements.
I do not know who is counting wrong, but after 5 breakpoints only "Software-BPs" are offered (which I never got to work yet), so how to use your 7 address-BPs?
5 breakpoints is a limit only in PSoC5, where there are only 6 address breakpoint and one being used by creator. With PSoC3 7 should be Possible. there is a possibility that you might have designed the project with PSoC 5 and might have later changed it to PSoC 3. In that case, it might not work. Otherwise 7 breakpoints is what is achievable for PSoC 3.