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iOS 7 will work on your 4S ... that is why you are being prompted to update.
I kept my iPad at iOS 6 and updated my iPhone to iOS 7 so that I could personally compare the two.
If you choose not to update, you are correct ... you would have to selectively update your individual apps.
If you choose to update the OS, always perform an iCloud or iTunes backup first.
Below for your reference is the link to the iPhone User Guide for iOS 7 and a preview of how the new features work on the iPhone 5S.