Are you using through regular copilot (the 'local' agent type), or through the separate claude agent type (which I believe you have to activate in your repository settings on github).

I had the exact same issues with the latter - randomly stops working, wipes chat history, just generally seems to be totally broken. But the former works totally fine and still lets you select sonnet/opus. My experience was before this recent 4.6 -> 4.7 change though.