It depends on the upgrade. If you have a AMD CPU with a AMD mobo and are going to a Intel CPU with a Intel mobo then yes. Windows wont accept the new chipset/CPU.
but you wont have to wipe the data drives. Just the Windows drive.
Your best bet to save the Windows installation easily is to make sure you upgrade to the same chipset and CPU vendor you have. So if you have a Intel CPU with a Intel chipset, get those in the new ones and Windows should accept the new parts and all you have to do is reinstall the drivers (chipset, sound etc).
Thanks Jimmy. Actually I plan to upgrade from Pentium to Core i3 with a different motherboard (I think with different chipset). And also I'll upgrade my DDR2 ram 4GB to DDR3 ram 8GB. So, in this case, am I right to say that I have to wipe out my HDD (the one that stores Windows 7) and have a clean reinstall of Windows 7, but keep the other Hard Drives (with data files - e.g. word files, pictures, and videos)?