Microsoft has confirmed that customers can purchase upgrade media and an upgrade license at a discounted price to move from Windows XP to Windows 7. However, customers need to do a clean installation of Windows 7. The pricing details of XP upgrade licenses are not yet known.
An operating system upgrade offers users the option of choosing between in-place upgrades, with installed applications & data in-place in the machine and a fresh installation which overwrites the hard drive's contents. By eliminating in-place upgrades, users can have a reliable installation after backing up all their data and applications. But still considering the huge number of XP systems in use, it is going to be a tedious upgrade as a lot of backup has to be done. ComputerWorld