There are definitely times when it is better to use a big two handed weapon rather than "smaller" primary and secondary weapons.As was already stated, at the lowest levels you get just one primary attack, so secondary weapons don't do any good... use the biggest weapon you can find. Your next advancement (Level 5 for some classes but I think it can happen earlier for warrior classes with good speed/dex) in weapon skill lets you attack once with a primary weapon and once with a secondary. Now a secondary weapon is attractive because it doubles your number of attacks, and usually adds more damage than you would gain by switching to a two-handed weapon.
Next, usually by level 9, your warrior/thief type characters get TWO primary attacks plus ONE secondary attack. At this point, two-handed weapons become attractive again: often two big hits from a two-handed weapon will be much more effective than two hits from a smaller primary weapon plus one hit from a much smaller secondary weapon. There are also some very good two-handed weapons that you can find once you reach level 9: the Spear+2, Crusader's 2H Axe+1, Sword of 4 Winds, and to a lesser extent even the No-Dachi and Zwiehander can significantly outperform the comparatively low-powered one-handed weapons you have access to. (At 9th level I hadn't even found a Walriblade yet, let alone any magical 1-hand primary weapon like the Broadsword+1 or Vorpal Blade.) Many of these two-handed weapons also have the melee attack option, and by this level you have a good enough chance to connect with melee attacks to make it a serious consideration.
Eventually (Level 13?) your warrior/thief type characters will be able to get two attacks with their primary weapon and two attacks with their secondary weapon. This is as many attacks as Wiz7 PC's are ever allowed at any level. At this point, primary/secondary weapon combos become attractive again. However, if you have an overwhelmingly powerful two-handed weapon, that may still outperform the best available one-handed weapon pairs. (Of course, the most powerful weapons in Wiz7 are one-handed: the Cane of Corpus and the *Light Sword*, so if you get them you'll be looking for good secondary weapons for the characters wielding those weapons anyway.)
Excaliber vs Avenger & Diamond Eyes is the form the one weapon vs two weapon question is asked. It's a close call... the melee option really cranks up Excaliber's damage, and at the level when you get those weapons you rarely miss against even the toughest opponents. (And if you're still missing, cast a few Armormelts!) Without using melee, Avenger / Diamond Eyes gives you more total damage. If your character has Kirijutsu and/or Power Strike, you get more chances to critical hit with Kirijutsu and more extra damage with Power Strike. I actually had a party with a Lord and Fighter side by side, one with Excaliber and one with Avenger / Diamond Eyes, and they performed pretty equally in combat. My personal preference leans a bit towards Excaliber.
One final point in favor of two handed weapons: more damage on the very first hit means less chance that the opponent will live to hit/spell you back!
There's no general right answer though; it will be different depending on what items your party has available at any given moment and what classes & races are in your party. And keep re-asking the question each time your party finds (or is offered by an NPC) a new weapon. You may have your Ninja in back with a Spear+2 and your Lord up front with the Crusader's Axe, but when Xen Xheng finally offers to sell you a Bushido blade, it may be worth it to put your Ninja up front with the Bushido blade and that Sai you've been carrying around and move the Lord in back with the Spear+2.
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Wizardry(r) 1-7 Conferences 
) for the Sammy and Cane + Rod of Sprites for the Ninja.