There are actually 3 types of Windows 7 licenses (and 3+ types of Windows 7, but that wasn't part of the question):
OEM: This is a full version of Windows, it can be installed on any PC, but, legally, it cannot be transferred to another PC even if uninstalled from the first one. It usually comes in a simple CD sleeve without any box or manual. I think most people in this forum would go for this.
Retail: This is also a full version of Windows, but, unlike OEM, the license is "floating"; you can install it on any number of PC, but it can be installed on only 1 PC at a time. If you buy a new PC, you can just uninstall it from the old one an install it on the new one. It usually comes in a box with some manual and costs about twice the price of OEM.
Upgrade: An upgrade version is for people that already have a prior version of Windows installed, therefore it isn't suited for new PC. I'm not a fan of upgrades, because if you have to reinstall your OS, you have to reinstall the old OS first than do the upgrade again, basically installing the OS twice. I think this version also comes with box and manual and cost about the same as OEM.