In most cases it is better to maintain the existing well. There is the
cost of a new well to consider and in California there may be a problem
getting a new well permit. I don't know what you mean when you say
"well produces anywhere from 1 gpm to 7 gpm "! Does that mean that
is all that the pump will put out or that the well pumps dry quickly? If
it pumps dry quickly then that could mean either the well screen is clogged
or the aquifer is damaged. More likely a clogged screen.
JL
200 ft isn't that deep for a residential water well these days, (in
terms of surface contamination) and that yield is rather low for modern
appliances -- even a low-flow toilet takes 1.6 gallons to flush.
Look at http://www.groundwater.water.ca.gov/technical_assistance/gw_wells/
and talk with someone from your local water district office -- they may
be able to assist you from a position of more knowledge about your
circumstances.
Beyond that, your best bet is leave your checkbook at home, but make
appointments to talk with a local well driller or two and ask for their
professional opinions based on your local geology, hydrology and cost
alternatives.