Replication steps:
1. Ensure that 'Local server multiplayer' is enabled on both devices
2. Ensure both devices are on the same network
3. Start a game on one of the devices
4. On the second device, select 'Play'
5. The game world should appear in the list of available worlds as 'Remote world at: <ip address>'
6. Select the game
7. The text 'Generating World' will appear, with 'Locating server' beneath. Almost immediately, the spinning progress indicator beside 'Locating server' will stop spinning. No further progress will be made and the game must be killed and restarted. On the game host device, the player appears in the world

Note that when tested on an iPad 1 running iOS 6, this problem does not occur - that is, the iOS 6 device can connect to a game on an iOS 7 device and vice-versa.

Note also that this bug has been filed under 'Minecraft' rather than 'Minecraft Pocket Edition' because the default JIRA profile does not appear to give permission to raise issues in than project. Please migrate this issue to the appropriate project and version number.