Wrist circumference is a somewhat misleading--or, at any rate, incomplete--measure here. The shape and proportions of the wrist would be crucial in determining how watches of different sizes look on it. In particular, it is the width of the 'flat' surface on top of the wrist, on which the watch sits, which determines how it looks. It can be wider on a 7 inch wrist than on a (differently proportioned, rounder all around) 7.5 wrist.
That part of the wrist indeed appears to be particularly wide in your case, making the 42mm watch look tiny--more like a 38. A 45mm watch would not look remotely too big on you, IMO. Which look you prefer, however, remains a personal choice.