Historically, I've cautioned Windows users against upgrading from one version of the OS to another, because the result is often a crufty, Frankenstein-esque install that doesn't run as fast or reliably as a clean install. With Windows 7, however, I've been forced to reevaluate this advice.
In the process of documenting the various ways in which one can install and upgrade to Windows 7 for my latest book, Windows 7 Secrets, I've discovered that the upgrade process appears to work a lot more smoothly than it did in previous versions. Now, I'm not ready for a blanket reversal of my previous advice. But I've now upgraded a number of heavily-used and constantly updated Windows Vista- and XP-based PCs to Windows 7 (in additional to numerous, less relevant virtual machine installs). I've upgraded on desktops. On notebooks. On Tablet PCs. I've even upgraded a Macbook.
After evaluating these upgrades, my basic advice is still the same: Though they require more work, clean installs provide better results. But I do understand that many people, for whatever reason, prefer upgrading. This is true both of those that run older versions of Windows and of those who previously installed a Beta or Release Candidate (RC) version of Windows 7 and want to upgrade to the final version.
Depending on the version of Windows you're upgrading from, you have choices.
Pros: Seamless, retains applications and data
Cons: Only supported on Windows Vista
With Windows Vista (and with pre-release versions of Windows 7, though Microsoft does not support this), you can do a traditional in-place upgrade, where you insert the Windows 7 Setup DVD in the existing OS, run Setup, and upgrade the entire system, applications and all, to the new OS. Or you can do a migration, where you use Windows 7's Easy Transfer utility to backup your settings and documents (but not your installed applications), perform a clean install of the Windows 7 OS, and then re-apply your settings and documents to Windows 7, again using Windows Easy Transfer.
Pros: Cleaner, works with both XP and Vista
Cons: Requires more work, must backup data and reinstall applications
With Windows XP (and Windows 2000), your options are fewer: You cannot perform a traditional in-place upgrade but will instead have to do a migration using Windows Easy Transfer. While this type of upgrade is less convenient in many ways--after all, you will need to later reinstall all your applications--Easy Transfer does provide a nice report describing what's missing, and the result is a cleaner, more reliable system than what you'd get with an in-place upgrade. For this reason, I feel that a migration is actually the more desirable upgrade type, even for Windows Vista, assuming you have all the application installers (and product keys) you'd need to make that work.
This is even more true of pre-release versions of Windows 7, because the in-place upgrade process is not supported on that OS. So while it is actually possible to perform an in-place upgrade in this scenario (using the steps documented below), for better results I recommend a migration instead.
One final note on migration: In case it's not obvious, the Windows 7 migration capability is also designed for people moving from an older XP- or Vista-based PC to a new PC running Windows 7. So instead of having to install the OS manually, you can simply run Windows Easy Transfer on the old PC to backup your settings and data, and then run it on the new PC to copy all that information over.
Windows Anytime Upgrade
Pros: Truly simple and seamless upgrade, doesn't require physical media
Cons: It's cheaper to get the Windows 7 version you want at the time of original purchase
Finally, Windows 7 supports the ability to upgrade in-place from one product edition to another, using the Windows Anytime Upgrade utility. This type of upgrade is incredibly fast and effective, results in no inefficiencies or stability issues, and, best of all, does not even require physical media: It's entirely electronic.
Let's get started
I cover Windows Anytime Upgrade separately in my Windows 7 Feature Focus series. So let's focus on the two more common upgrade scenarios here: Upgrading from Windows XP, which will require a migration, and the in-place upgrade from Windows Vista.
Continue to Part 2: Upgrading from Windows XP to Windows 7...