Changing operating systems won't, by itself, remove any programs or user files. You are likely to find that a number of your existing XP programs and hardware drivers will not be compatible with Win 7, but everything will still be there and most of your user files can be imported into other software if your current software won't work in Win 7. Bear in mind that when you install software, it embeds information in the system registry to enable it to run. If you boot an XP machine with a Win 7 disk, you will be loading the Win 7 registry, not the XP registry, so most of your old software won't work without reinstalling it.
Outlook Express was, from the start, a third party program that Microsoft bundled with XP but never really supported. It became orphanware even before Win 7 came out. Too bad; it was better than a lot of stuff produced by Microsoft. I had OE working under Win 7 for a while but encountered problems (don't recall what at this point), and eventually gave up and imported everything into Outlook.
Outlook is actually part of MS Office, it doesn't come bundled with Win 7. It is the dominant email program because it can handle almost anything, but that power can make it a little overwhelming for a casual user. If you have simple needs, it could be overkill and your learning curve will center around ignoring most of the features it throws at you. There are many other email programs, including many free ones, that are more than adequate for basic email needs. There are also many free Internet-based email clients. Many of the alternate email programs will import OE files.