I have a Synology DS218+. I need to update to DSM-7. I have two new HDD to replace the existing (lower-capacity) disks.
Any advice for the big picture? DSM first? New HDDs first?
Any help or best-practices would be appreciated.
P.S. I have current backup of all data on the Synology (one in cloud, another on external SSD)
How are you planning to transfer the data to new NAS?
As you have 2 “upgrades”, I would start from scratch.
Install the 2 new drives, and upgrade to DSM 7.
This will offer a dialog to format the new drives.
(Don’t think you can choose file systems on a 2 bay unit)
New drives formatted, DSM 7 installed, now copy your data back.
This is not the only approach, You could migrate to new drives,
and then upgrade DSM. You could upgrade DSM and then install
drives. There is really no bad approach as there are few options
with a 2 bay unit. However given that you are moving to higher
capacity drives, and have backups, it’s easier to just start fresh.
This will also give me a good excuse to reorganize my file structure 
Despite having a SSD backup, you likely don’t want it to be your only copy.
I would: 1. Update Drives => 2. Update DSM => 3. Reorganise files
This way you keep your Synology copy intact at all times. You also keep your Volume and Access settings and Shared Folders intact and don’t have to rebuild all of that.
It’s the least friction option, but not the fastest, which likely will be to rebuild from scratch and to copy data back from SSD
While that will work, the caveat is if you are not using Synology SHR
(RAID) then the larger drives extra capacity will not be recognized.
UPDATE:
The 2 new HDDs are WD-Reds from a BestBuy Black Friday deal. One of them is DOA and now I don’t trust the other one 
I’ll be returning both.
I returned my existing (4TB) drives to Synology and updated DSM to 7. The DSM update process worked smoothly and all volumes/files on the drives were preserved.