Per the Font of Magic feature, sorcerer can use Flexible Casting to create 5th-level spell slots at level 7, even though they are not typically available until level 9.

You can transform unexpended sorcery points into one spell slot as a bonus action on your turn. The Creating Spell Slots table shows the cost of creating a spell slot of [5th level is 7]

If such a sorcerer levels up while still having this 5th-level spell slot, can they choose a 5th-level spell as the spell they gain upon levelling up?

The Spellcasting feature states:

Additionally, when you gain a level in this class, you can choose one of the sorcerer spells you know and replace it with another spell from the sorcerer spell list, which also must be of a level for which you have spell slots.

Nothing in the standard rules seems to forbid it.

Flexible casting allows you to create spell slots:

You can transform unexpended sorcery points into one spell slot as a bonus action on your turn.

These slots are treated no differently to the rules than normal spell slots.

The rules for learning spells say:

Each of these spells [you learn] must be a level for which you have
spell slots.

Since you have a 5th level slot, by a strict reading you could do this.

There are no other rules¹ that I can find or think of that have any effect on the ability to do this, thus it seems to be permissible (or at least not explicitly excluded) by the rules.

It may not work depending on how the DM does leveling

There are no normal rules about when level up occurs, but many DMs allow leveling at the end of a long rest.

Since created spell slots vanish when you long rest, they would be gone before you could level and choose your spell.

Any spell slot you create with [Flexible Casting] vanishes when you
finish a long rest.

If your table levels after a long rest, then this strategy won't work.

Almost certainly not intended (or at least planned for)

This is clearly a loophole use of the ability and is almost certainly not intended to work this way.

For example the following sentence of the rules about learning new spells says:

For instance, when you reach 3rd level in this class, you can learn one new spell of 1st or 2nd level.

This is referring to the spellcasting table for Sorcerer which outlines the slots a Sorcerer has at each level (and number of spells known). Note that there is no qualification here (eg "...unless some other feature grants you more slots"). The implication in the rules, though it is not explicitly stated, is that when the rules say "level for which you have slots" they mean "level for which you have slots according to the table".

Probably not worth it

A DM can certainly allow this and I don't think it would destroy their game alone (though I have not and likely will not ever play with this ruling). The exploit only seems to exist for 5th level spells so the impact, at least, is contained to that alone. In the end the sorcerer is trading almost all of their sorcery points just for the chance to cast up to two 5th level spells 2 levels earlier. Even so, I would think hard before allowing it unless you think this will enhance the fun at your table.

Maybe? Under two conditions

1.) You'd need to level up at a time other than the end of a long rest.

This is because, after an errata to the PHB (p. 101, post errata)

Any spell slot you create with this feature [Flexible Casting] vanishes when you finish a long rest.

There is nothing in the standard rules that link leveling up to long rests, but it is often done in games by default (so that issues of the new max hit points or how many spell slots you have are easily dealt with). And in Adventurers League play, it's part of the rules... almost.

According to the Adventurers League player's guide:

A character who earns enough XP to advance a level
does so at the end of a long rest or at the end of an
episode or an adventure.

A lot of leveling up will probably happen at the end of long rests, and that would mean that your created 5th level slot would not be available (you wouldn't "have" a 5th level slot when you gained the level). However, even in Adventurer's League it's possible to gain a level at a time other than the end of a long rest, so this strategy could possibly work, some of the time. As long as you also satisfy the second condition:

2.) Your DM would have to let you

I feel silly putting this condition in, because it's a condition of anything you would ever want to try, so it hardly seems necessary to point out. But in this particular case, it's so unlikely for a GM to permit this strategy that you should factor that into your plan.

That being said...

RAW, there is nothing stopping this strategy from working. And honestly, it might not even be worth the trouble. Sorcerers know fewer spells than any other full caster (Warlock being a bit of a weird case), so the spells they can cast need to be carefully chosen. Selecting a spell that you can only cast through created spell slots might be enough of a downside to balance out the advantage of gaining a higher level spell earlier than expected. That being said, you'd need to satisfy both of the above conditions to even attempt this: and the second one is a doozy.