Close, but you forgot to configure your pins as outputs.
All I/O-pins are inputs on power-up by default.

This would work.

Code:
CMCON = 7
ANSEL = 0
TRISIO = 0 ' GPIO = outputs

Start: 
         GPIO=7
         PAUSE 500
         GPIO=0         
         PAUSE 500
         GOTO Start
And if you're really stingy on code space, you could do it something like this;

Code:
CMCON = 7
ANSEL = 0
TRISIO = 0 ' GPIO = outputs
GPIO = 7

Start: 
         GPIO = GPIO ^ 7 ' Toggle GPIO.0, 1 and 2
         PAUSE 500
         GOTO Start