jrmcferren:
Since the 7.4 volt pack could cause problems with the regulator dropping out and not providing the full 5.0 volts, you should go with the 11.1 volt pack, but you run into the problem of heat on the boards regulator.
Unless the circuit has any ADC measurements going on have the regulator drop a little below 5V on the output isn't an issue (Arduino at 16MHz will actually run as low as 3V in practice, running at 4.5V is actually within spec for most 5V chips!), and frankly it will probably still hold 5V with 6.6V going in (remember datasheet drop-out values are often worst-case across temperature range at full rated current - typical drop-out voltages may be much better). And going for a 2S rather than 3S pack is a big saving in cost and thermal dissipation issues. Besides its not a great idea to fully discharge LiPo packs in the first place, any imbalance in the cells and you shorten the working life.
If you can measure the drop-out (bench power supply) then my theory can be tested of course.