With Instant Booking, you get 3 penalty free cancellations / year.
I would consider cancelling.
You will get a public "Host cancelled this reservation" on your account, but future guests would hold it against you.
Now that you have real experience, analyze your mistakes.
1. Price so that you WANT to host.
2. Do NOT accept week long reservations. You are still learning and a week long unpleasant guest may ruin you forever. Try 4 day max, until you learn this business
3. Do NOT feel obligated to provide anything more than your listing
4. Do learn how to say NO and how to suggest that the guest cancels. "No I cannot provide an extra mattress. My listing may not be good for you. You have 24 hours to cancel, penalty free."
5. Don't waste time on undesirable guests.
All hosts go through bad guests. We eventually learn tricks. Airbnb WILL be fun. Be patient