You really do need to back up your files against the rare possiblity it could fail and your files can not be rescued from boot mode. You get 15gb of free storage on Skydrive with each Windows Live ID - just google it.

Win7 will pull any needed drivers over from your System32 Drivers folder no prob.

Read the blue link Repair Install and follow the steps closely.

Afterwards you'll need to run Windows Updates for several cycles to get updated since SP1. Be sure to use the latest installer.