I also found that you can just downgrade from Visso Vista Basta it seems, and not only to XP, but to Windows 95 if you wanted to.
I know Paul Thurrott received an email from soneone that was asking for an apology from him about that now they are going to lock XP so that you can't activate it anymore, and that your forced to move to Vista, so clearly, there is a lot of FUD about this. Oh well...
XP Can be activated by any manner of means -- not all legal -- seriously guys unless you HAVE to have it just move on.
W7 will run on quite modest hardware. Use a Virtual machine for old XP legacy stuff that really won't work on W7.
I've finally retired my Win XP 64 machine - replaced with W7 X-64 build 7077 -- it's fine. I was going to keep it but the latest builds of W7 are so good I just decided to bite the bullet and change now.
I still need Windows XP to run some old legacy hardware which is totally incompatable with Windows 7 ( and also with Windows Vista) such as an old NIKON photo film scanner, a canon flatbed scanner, an old HP Plotter, and a Minidisc fast CD==>Minidisc burn application. These all run fine on a Windows XP Virtual machine -- this will last for years --don't need any updates etc etc.
Dual booting is a pig --don't do it unless you really have to. There might be some old Video editing apps which won't run on W7 and for this you need the REAL hardware so a VM won't probably work either.
Firing up a VM is easy, fast and convenient -- you don't even have to stop what you are doing on your HOST machine either.