I bought the Windows 7 Home Premium Upgrade (retail) when I rebuilt/upgraded my box. The Home Premium Upgrade works fine for upgrading from XP or Vista per Microsoft, they're wanting to move users from XP to 7. It was priced at $89 along with a $10 off coupon from Newegg total cost $79. I'm very happy with Windows 7, I chose to use the 64 bit version, you get both 32 and 64 bit CD's but you can only use one version with the product key.
The upgrade version isn't less than the full version as far as functionality, if you have an OS to upgrade from it should be fine.