The error in the sentence "There's now seven new flavors" is THERE'S.
"There is" refers to nouns in their singular form since "is" goes with singular subjects and objects. In this particular case, the correct option should be "there are" in order to collocate with the "seven flavors" (plural form of the noun flavor) mentioned in the sentence. "ARE" is the form of the verb to be that refers to the plural form of the words.
Answer: THERE ARE NOW SEVEN NEW FLAVORS!