Technically, when you purchase an OEM copy of Windows, it's supposed to as part of some form of hardware, usually a complete PC, or sufficient components from which a pc can be built.
The last ever retail edition of an OS that I purchased was MS-DOS 5.0, and have been purchasing OEM editions since them. Primarily because it's cheaper. Truth be told, I've never even seen an off-the-shelf retail edition of Windows XP, Vista or Seven. Distributors and retailers alike here in South Africa want to make money, and if they flat out refuse to sell OEM copies to customers, then they go out of business, because the customers simply go somewhere else where they can get the same thing cheaper elsewhere.
The only real difference between OEM and retail editions are the packaging.
I stopped buying upgrade editions of any software years ago because of some nasty experiences. For example, here's how I used to install Windows 95:
- Install DOS 5.0
- Upgrade to DOS 6.0
- Upgrade to DOS 6.2
- Install DOS 6.22 Step-Up
- Install Windows 3.1
- Upgrade to Windows 95
Sure, it's become easier these days, and it is indeed possible to "clean install" Windows Vista or Windows 7 from upgrade media, but why go through that effort to save a few bucks? I actually performed a test with a friend not very long ago where we both re-installed our computers at the same time.
I used a full OEM copy of Windows 7, and he used upgrade media. I was finished installing all my drivers
and primary application software by the time he had completed his Windows 7 installation, and I was keeping myself occupied by playing Solitaire...
Long story short: Upgrade media saves you money, but is not worth the lost time and effort.