Not sure what else can be added, except to also say that along with the massive under the hood changes mentioned by Pinhedd and Hawkeye22, includes a pretty massive overhaul of the Windows UI. XP was a 2D GDI+ based system, whereas Vista and 7's Aero are more or less a DirectX app, so make better use of the GPU for improving performance and responsiveness of the UI. Thus paving the way for a lot of new multimedia heavy features that simply wouldn't be possible with XP.
Also, we shouldn't overlook the fact that support for XP ends soon, while 7 will be supported for a long time to come. Making it easier to keep malware and other pests off your computer, and newer versions of programs will be less and less likely to work with XP.