Hang on. I'm not sure I understand. You have XP installed right?
I don't think you can upgrade from XP to Windows 7.
I think your only good choice is to dual boot. You would have to use something like gparted to shrink your XP install and then install Windows 7 on a small partition ( at least 20GB )
Then you would get a choice at boot and choose which os you wanted to go into.
Also this is still only the release candidate so I'd definitely want to keep my XP install as well if I were you.
If you look in tutorials on the home page you'll find tutorials about dual booting. I've found them really useful