I have seen control panels with a 7th button for each player and always wondered what they were for.
It hasn't been mentioned in this thread, specifically, so I'll tell you here ...
As mentioned, you only need 4 buttons for players 3 and 4. The exception to this is console games (SNES, NES, N64, Dreamcast - either emulated or built into the cab.) The problem here is that consoles use a lot of buttons - for example, even an SNES is D-pad (joystick), 4-action buttons, shoulder buttons and select and start. So six buttons per player will just do it. Later consoles use even more inputs. The workaround is to use a USB hub and USB gamepads which is more accurate anyway.
For P1 and P2, the extra 7th button is mainly there for Neo-Geo games. This used a four button layout like below:

So the 7th button allowed you to play these games as intended, while also having the standard 6-button Street Fighter layout. NOTE: Only a few Neo-Geo games (mostly fighters) used all 4-buttons and even if you support all four buttons, you don't need 7 INPUTS - the 7th button can share one of the inputs from the row of SF buttons that you are not using.
Hope This Helps!!!