No, there is no direct upgrade path to Win7 from XP. You can upgrade from XP to Vista, then Vista to Win7. Your best bet is to just do a clean install of Win7. If you install to the drive that XP is on, it will rename your windows folder to windows.old and you can copy files out of there as necessary. You'll still have to reinstall your apps though.
According to Microsoft Technet Win7 forum, as long as you have a properly licensed Microsoft OS, you can upgrade to Win7. Win7 will ask is want to do a full clean install or an install in place. Go with the clean install. Here's the message I got:
Another user, Techwrighter, has replied to a thread you have subscribed to in the Windows 7 Miscellaneous Forum.
Thread Title Making sure on installing retail version
Started by: LilBro
You've stated that you still have the XP disk(s) so you will be able to purchase and use the 'Upgrade' packs of Windows 7. You would need to ensure that XP is installed first, to 'qualify' the upgrade key you received with the upgrade pack.
The Windows 7 installer will give you the choice of performing an upgrade install or a custom clean install.
Do the consumer homework first though. If you find that an OEM System Builder pack is selling for less than a retail upgrade pack then in your circumstances it would likely be a better choice.
No, but if I were you I wouldnt upgrade, Id actually build a good newer updated PC and keep the older XP OS for a second PC..... this is my opinion of course and if you arent willing to spend on a PC upgrading is good. You can build a Windows 7 PC for about $500 however....
All OEM will work, just no manuals or support directly from MS ( this might or might be the case - since MS wants to make Win 7 successful, might handle support) - You wll have to have clean install from XP to Win 7.