Players averaging a "7" i'd keep. Any player averaging around a "6" i'd sell.
Its also important to note that some positions in general average a better average form than others.
MC's, DMC's and GK's usually have the poorest form in this game, so a player averaging between a "6" and "7" is recommended to keep until you find a few players at those respective positions that average above a "7".
ST's usually have the best form, so if you players form average is a "7" you have a dud. Generally, a quality ST is someone who gets mostly 8's with an occasional "7" or "9".
good defenders are usually a mixture of "7"s and "8"'s.
Reiterating the form thing, its bizarre but I have come across a one-star defender that got MOTM against me in the cup when I was level 6. This players quality was 16, so he was one-star for level 3 and I my strikers ranged from 5* to 7*. It was the only match I lost that entire cup tournament, which I went on to win. At lower levels its rarer to find low quality players dominating, but at higher levels where the quality gap is smaller (25 Q vs. 15Q is a larger percentage gap than 85Q and 75Q) so a players raw stats impact the match less, whereas hidden mode stats play a larger role in shaping player performance.