I don't think Release Candidate can be upgraded, as for what I know the EULA states the software has an expire date and that is for evaluation only, so you would need a license for a full final version, and a clean install would be in any case recommended.
Yes you can upgrade RC1 to the release version. What you cannot do is upgrade Windows 7 Ultimate (which RC1 is) to Windows 7 Home Premium or Professional.
If you google on it you will find procedures (several different ones) for updating Windows 7 Ultimate RC1 to Windows 7 Ultimate release. it involves copying the iso to your hard drive, changing the build number in the iso, and then burning it to a DVD.
Thanks! and yeah i know how to upgrade the RC to Full Windows 7 all you need to do is open the ISO file then go into sources and find a file names cversion and then change the first numer to 7000 and then you you will be able to upgrade windows RC!
Here is a really good source on how to do just that
I would just do a clean install. The RC and the Betas were not meant to be used as production machines. I never did. I would test various pieces of software out for a couple of hours, or whenever I got new hardware or new software, I'd install them and test them under Windows 7. However, my main work was still being done in Vista until I my copy of Windows 7 came in the mail.
I would really suggest NOT doing the "upgrade". Do a clean install. I always do because you just never know what stale crap is still lying around. A clean install ensures all stale dlls and such are gone and you are starting from a clean slate.
having tried upgrading from Vista to W7, I agree with isamuelson, do a clean install it's faster and then if there are any issues it won't carry them forward, BTW upgading has been known to cause issues, plus it took 8 hours to upgrade from Vista home premium to W7Ultimate on my laptop