Fräulein Pepys bought a new laptop with Windows 7 and, despite my usual Microsoft-bashing, I quite like it. It's very quick (unlike my experiences with Vista), the interface is nice and it's very well-thought out generally. They've obviously made an effort to fix minor annoyances, such as slow boot-up and shut-down times.
The only hassle I had was getting Outlook working when I installed Office 2003 (not helped by me having to configure the German language version). Otherwise, we've had no issues at all.
If you buy a new computer, there's really no reason not to get it. However, if you're generally happy with XP (and you're careful with security), then I'm not sure there's a compelling reason to upgrade. Personally, for the vast majority of my home computing I use the web browser, Skype, a media player, an FTP client, an image editor and a text editor (and I can happily do all that on XP or Ubuntu).
To answer your question, there's no direct upgrade path.
If you want to go from XP to Win7 don't upgrade, Back up whatever you need to keep and then install it with a drive format.
Upgrades of OS are notoriously flakey, especially from one core platform to another.
I wasn't going to get Windows 7, because I was happy enough with XP, but then I found out I was entitled to a free copy at home as I work from home sometimes, so I installed it just to see.
I could never go back to XP again, Win7 really is much better. And installing it was a piece of piss, I didn't have to install any drivers at all, Windows takes care of that for you now. You pop in the CD, enter in some minor information and let it install. Come back 30 minutes later and you have a fully functioning Windows desktop. I was in shock, I didn't think Microsoft were capable of that kind of ease of use. I had left my USB webcam plugged in and it had even installed the drivers for that too.
And as hobbes says, the clean format of the drive is a good way to go. I keep all my files in my C:\crap\ folder, so it easy to back up. Thankfully I never got into this My Documents, My Music, My Pictures folder business.
Prior to getting my laptop I talked to a friend who works for a software development company in York, and had been working with Windows 7 since about January last year. Apparently MS sent out copied to places all over the world, heavy-duty OS users, and told them to actively go looking for bugs and report everything back. Then unlike Vista, they listened to all that feedback. My mate was absolutely raving about it around a month before it was released, and even having heard his high opinion I've been blown away by it (having been on XP previously and only ever used Vista very briefly, once, on a friend's computer).
One thing Stumpy, from some of the searches I've done regarding differences between the OSes etc, slow boot-up / shut down times with Vista was anything but a minor annoyance. I read stuff about people switching their computer on and coming back half an hour later to find the desktop was just finishing loading. That's pretty much what Internet Explorer 8 did when I got it onto my old XP computer. With Windows 7 IE8 works just fine (not that I use it any more, because that XP upgrade convinced me to give Chrome a go).
Rather pleasingly, the one biggish problem I had with the release candidate of Windows 7 - it wouldn't recognise my sound card - has disappeared now I've installed the retail version. It wasn't a huge deal, as my onboard sound was decent enough, but it's satisfying nonetheless.
Windows 7 is superb. The adverts may be annoying, and Microsoft are evil etc. etc., but there are some genuinely useful new features in it (for example, the side-by-side view).
Now, what do I do for that "clean format of the drive"? Surely I don't reformat the C drive, do I? Will Windows 7 wipe the drive clean for me when I install it?
The only minor irritant I have is my dual video card isn't good on Win7 (either RC1 or full release) so when I have the res at 1900x1400 the right hand screen sometime flickers.
I'm using that as an excuse to give myself a new PC and put x64 of Win7 on there and stack it with 16gb RAM and an extra video card so I can have 3 22" monitors instead of the 2 I already have.
I love being in IT.
So, my better half got herself one of those Asus netbooks for Christmas and dropped it, breaking the screen. I bought a new screen for it and have fitted it (she has already bought a replacement), and this is my first experience of Windows 7, and I'm quite impressed by it all. It feels, I don't know, logical. Everything is in the right place, where I would expect it to be. A new netbook for £75 and half and hour of fiddling around with a screwdriver. All in all, I'm marking today down as a successful one.
Backup everything you have and change the boot order of your PC/laptop so that it will boot from the DVD-ROM on startup.
You CAN upgrade from XP, regardless of what the bods at Microsoft tell you but in my experience, a clean install is ALWAYS the way to go. I still have XP SP3 on my Dell Inspiron 1300 but I (clean) installed Win 7 Home Edition Premium on my Toshiba NB205 netbook and it works like a charm, outperforming XP in some areas...
The only problem with Win 7 is the licensing. When XP was first released I think you were allowed to use the product key for 3-5 installations. With Win 7, it seems that you are only allowed to install it on one machine only...