Yes, I would suggest a "clean" install.
Save all your important documents, Pictures, videos, music, etc to a flash drive.
Be aware, you'll need to re-install all your 3rd party applications, they will not run from the saved partition.
I use Gparted to set up all my Windows installations.
See this document for moving/resizing partitions.
GParted -- Documentation
I would give Windows 7 at least a 60 GB partition, if you're going to install the 64-bit edition, I'd recommend 100GB.
Download Gparted here:
GParted -- Download
You may have to shrink some hard drive space, then move the original partition there
If you're unsure, post back and I'll try to run you through the process.