This seems to have developed a couple of unhelpful quirks.
The first problem is that the default disk image file seems now to be qcow2, and there is no way to change this from the creation wizard. The second problem is that it no longer names the disc image file after the name of the server being created – instead choosing to call them ‘rhel7.0.qcow2’ instead. That’s not very helpful.
It is possible to work around these – by creating the storage beforehand (pick details instead of new, navigate to storage tab) and then using that to create the new VM, but it’s an unhelpful change of behaviour.
I get pushing qcow2 as a default, but not as the only option. I guess many people create their vms more from the command line, so the wizard doesn’t get much love, but losing functionality in this way is disappointing.
It seems that they have also changed the default cache option away from ‘none’ which makes you domains non-migratable! This is a serious pain.
I’ve now found the preference in virt-manager which lets you pick ‘raw’ as the default disc device for new systems. It still wants to call them all rhel7.0.img and won’t let you customise it though, which is unhelpful. At least when creating them by hand in the storage tab it defaults to raw. Small mercies.