While Windows XP supports only migrating to Windows 7 via the Windows Anytime Upgrade tool, Windows Vista have a choice: They can use WUA to perform a clean install of Windows 7 and then migrate their settings and data over from Windows Vista, or they can simply perform an in-place upgrade. This latter choice is what most people think of when they think about "upgrades" in Windows: You run the Setup executable for the new OS in the old OS, wait a few hours, and return to a frankenstein-esque install of the new OS, complete with all of your old applications, settings, and data.Upgrading to Windows 7 Part 3
If all goes well in a such a scenario, all your applications still work. All too often, however, in-place upgrades failed to live up to this promise in previous Windows versions. The situation is Windows 7 is somewhat improved, more than partially because Microsoft only supports in-place upgrades between Vista and Windows 7 (and between different Windows 7 versions, of course): Those OSes, off course, share a common foundation, easing the process.
Paul Thurrott published part 3 of his upgrading to Windows 7 series