Well, write out a backstory (or a few backsentences) for each dwarf, using the personality screen for inspiration. Why are they being punished? Are they a particularly famous individual? Are they above average in certain skills? Who would stand out as thei 'leader'?
Consider whether each dwarf knows one another or whether they're in it alone. Perhaps this could lead to two separate, sparring colonies being established on the same map, or one colony filled with betrayal and backstabbery.
I tend to imagine penal colonies being established in places no sane dwarf would ever choose to embark, so like a sandy desert or glacial plain. Perhaps an evil locale?
Equip them with practically nothing. They are being sent to a place no one expects them to survive, so make it a one-pick challenge. Or maybe they escaped a larger caravan escorting prisoners through the countryside, and stole a bunch of miscellaneous goods on the way out. Lots of ideas!
You could also embark with 7 administrators, all nearly useless at surviving. These become the Seven Wardens, whom you must protect from death at all costs while establishing a large prison complex. Occasionally hiring guards, you lock up most migrants in small cell-blocks. These prisoners are tasked with carving stone mugs, day in day out. A small chute drops in both the raw stone and their food, sometimes at the same time! Life is hard for the prisoners, but the Wardens believe in their own moral superiority and suffer no guilt.