The .707 is the square root of the integral from 0 to 2π of sin(θ)^2 dθ, divided by 2π. Which is, as RobbieD said, the RMS value of the waveform. That integral comes out to 1/sqrt(2), which is, rounded to three digits, 0.707.
(Edited to turn off smilies, which were showing up in the middle of the math.)
[This message has been edited by SolarPowered (edited 01-30-2006).]
