You won't have to format at all! The clean install will dump all of the data from your RC install into a folder called "C:\windows.old" (supposing your system partition letter is C), and then install the final version of Win7. So no need to format; the old files will be swept away into a corner, so to speak, by the installer.
Emphasis on the response from baddad, the RC is Ultimate so that is the version of upgrade you will need.
I don't think that's true. It requires a clean install, but at least going from Vista you can "upgrade" to a lower version. It just requires a clean install, which the RC requires anyway.
I don't think it really matters, though. The RC license qualifies you to use an Upgrade version of Windows 7, and you can install the Upgrade version no matter what's already on the HDD, even if that's nothing.
I just went through the Windows 7 RC to Win 7 Home Premium deal myself. Although I went from a Raid 0 Config to a single drive configuration, so I formatted myself.
If you have multiple hard drives installed, DISCONNECT all of them except the one you want to install on. Just trust me. I just got done using data recovery software last night to recover 189GB of videos and photos and other stuff.
If you have Win 7 RC installed (Which is Ultimate) the new Upgrade (if it isn't Ultimate) will require a "clean install". However, this is not a complete format. It will however, compact all your current data on the drive into one folder called "Windows.OLD" Then it will act as if it's performing an entirely fresh install of Windows 7 on your hard drive.
So it's not really an "upgrade" from the RC. Once you put the disk in the drive you'll see what I'm talking about. It normally will give you two options. 1) Upgrade in place or 2) "Clean Install".
Keep in mind, without using some kind of work around, the Win 7 Upgrade disks WILL NOT "Clean Install" on a formatted drive. It will claim your CD-Key is invalid. So you're best to already have Vista, XP, or Win 7 RC installed before you start so it works smoothly.