Just installed over XP sp3, it kept all my programs, files, and stored them in a folder called windows.old. I didnt have to redownload anything I could just open them up and install them in Windows 7.
The first time I tried the install it said I was missing install.wim and I could not proceed but then I rebooted and had a clean install all the way through.
The only driver I had to update was for my wireless adaptor but it was working fine with the default driver. I am going to install it on a new hard drive as mine is only a 5400 40gb and I was getting a low score on it but my other stats are:
xfx geforce 8200
amd 64x2 black 5000
2gig of dual channel ram
everything is working great and fast!