If you're thinking about upgrading a PC from Windows XP to Windows 7, please download and run the free Windows Upgrade Advisor to see if your PC can run Windows 7 acceptably. If you decide to install Windows 7 on a PC running Windows XP, you'll need to do a custom installation.
PCs designed for Windows Vista should run Windows 7 very well. To double check your PC's capabilities, you can download and run the free Windows Upgrade Advisor. How you install Windows 7 will depend on the edition of Windows Vista on your PC, and the edition of Windows 7 you want to install.
There are only 3 possible ways of upgrading from different versions of Vista to different versions of Windows 7:
Windows Vista Home Premium to Windows 7 Home Premium
Windows Vista Business to Windows 7 Professional
Windows Vista Ultimate to Windows 7 Ultimate
If your choice of upgrade is not the above, then a clean install is the only option. Also, you can only upgrade from 32 bit to 32 bit or 64 bit to 64bit. You must clean install if going from 32 bit to 64bit and vice versa. See "Can I do an in-place upgrade, or is a clean ('custom') install necessary?" under "How to install".
You'll either do an "in place installation," which keeps your programs, files, and settings in place, or you'll do a custom installation, which will set up your PC from scratch. A custom installation is also called a "clean install" because it will erase your hard drive. To avoid losing anything, you'll need to make copies of all the files, photos, and other information you want to keep. You'll also need to have installation disks for all the programs you want to use. If you have an external hard drive, you can use it with the free Windows Easy Transfer program to help back up your files and information, then transfer them back to your PC after Windows 7 is installed.
- My PC is running Windows XP. Can I upgrade it to Windows 7?
- My PC is running Windows Vista. Can I upgrade it to Windows 7?
- What is the difference between an in-place upgrade and a custom (or clean) install, and which should I do?
- In only eight hours, pre-orders of Windows 7 at Amazon.co.uk surpassed the demand Windows Vista had in its first 17 weeks. It became the highest-grossing pre-order in Amazon's history, surpassing sales of the previous record holder, the seventh Harry Potter book. Reviews of Windows 7 were mostly positive, praising its usability when compared to its predecessor, Windows Vista. CNet gives Windows 7 Home Premium a rating of 4.5 out of 5 stars, stating that it "is more than what Vista should have been, [and] it's where Microsoft needed to go". 
- This TSR thread will give you an idea of how much TSR users like it, please excuse the Mac fans who voted "worst OS ever" (Poll) Windows 7: What do you think of it?