By default when you install an OS, this make the installation drive as C drive, in this case, you 150GB drive. When you boot the firts time on this, copy and paste all your documents from you old HDD to the new OS.
Ok, so, you can install the Win 7 and have a dual boot vista/7, or install 7 and from the msconfig, boot tab, delete the vista boot. This only delete the option to the dual boot, but your files and partition keep safe.
Backup all your saved games. Remember different games have different locations of saving their saved games. So locate them individually and back them up. Once reinstalled the OS, install games once again and copy those saved games to the locations they should be.
You have a new WD HDD. Like most HDD makers, WD will give you for free a software utility package that does what you want easily. Download from their website Acronis True Image WD Edition and install it on your existing C: drive. Make sure you get the user manual for it, too. It is a very good and versatile package that does lots of things you should read up on. But for now, concentrate on Cloning.
The major use of cloning software is for people who have bought a new (usually larger) HDD and want to copy absolutely everything form their current C: drive to the new one and have it take over the C: drive (boot drive) function. Then the old drive can become a data-only drive or whatever. This is exactly your situation, except that it happens you're moving to a smaller (but faster) unit.
With the software installed and both old and new drive units hooked up, boot directly into BIOS Setup (hold down "Del" key while booting up, usually). Go to the place to set SATA port parameters, and make sure the port that has the new HDD attached is enabled. Check the mode setting for your old drive (IDE emulation, native SATA, or AHCI, I presume, but not RAID) and set the port mode for the new unit the same. Do not set (elsewhere) the BIOS to try to boot from the new drive yet. Save and Exit to finish booting.
Now you run the Acronis software and go to the section for cloning. READ the user manual for details of this process and its options. You will want to be sure that the NEW drive is specified as the DESTINATION, because the Destination drive will have all its previous contents destroyed! Make sure it is set to use ALL of its space in one large Partition (unless you have other plans as recommended by cutts007), that it is set to make this new drive bootable, and that it will install an NTFS File System (not FAT32). With all options set run the cloning task. When it is done, shut down and I recommend re-connecting the SATA data cables so the new drive is plugged into the same mobo port as the original HDD was. For now, I also recommend you simply disconnect the old 750 GB unit. Reboot into the BIOS Setup screens and just check that the new drive is set as your boot device (maybe second choice after your optical drive), Save and Exit to boot from that Velociraptor.
After you have run for a while this way and are fully comfortable that it all works, you can turn your attention back to your old 750 GB unit. Decide what you will use it for. Up to this point it has been a full backup of your system up to the point of making the clone and switching drives. Now you don't need that backup any more. Maybe you just reconnect it and make sure its port is enabled, then plan to wipe it clean and use it as a data storage unit. In that case I'd recommend using that same Acronis software you got to Delete all Partitions and Create one or more new ones, then format them so they are ready for use.