When using simple I2C (I2C via SCI peripheral), you need to set the output type of the SDA and SCL pins to n-channel open drain, this is stated in section 34.7.4 of the S7G2 HW manual "In simple IIC mode, the open-drain setting for the communication ports should be made on the port side."
Also, ensure that there is an external pull up resistor on the SDA and SCL lines.