Windows Vista Premium home edition with all updates installed, and wen i go to upgrade windows 7 it says, i need windows vista sp1 in order to upgrade, and i do! What is the problem!
One Caveat here -- don't assume that programs that need activation will automatically be re-activated when re-installed on W7.
Office Enterprise seems OK (doesn't ask for re-activation) but if you use ADOBE photoshop CS4 - transfer activation otherwise no-go (and its an expensive license).
Take an image backup as well (before transferring activation) so you can always go baxk to your old os if you need to.
BTW if you are using VISTA you can do the SP2 Beta upgrade now -- that's DEFINITELY worth doing if you are a VISTA user. Download available from the public microsoft site.