1. No to the first part and yes to the second.
2. You will need 64 bit drivers for your hardware, motherboard drivers, video, sound, tv tuner cards and so on.
"Are all 32-bit programs unusable? Most 32-bit programs will run ok.
"Can I run 32-bit programs in "XP Mode"? " You only need XP mode for programs that are not compatible with W7.
I have to add I have used Windows 7 x64 for well over a year now including Beta versions and have not run into a single program that will not run. If you have Pro or Ultimate then XP mode is for exactly that.......those few programs you might have issues with.
Are all 32-bit programs unusable?
Can I run 32-bit programs in "XP Mode"?
When you run 32-bit programs, you'd see an asterisk beside the process name on Win7-64's task manager. Win7 does this automatically and no user intervention is required to determine if it would run in 64-bit or 32-bit.
Win XP mode is really for the special cases wherein it completely doesn't run on Win 7 (applications that need this are quite rare).
Just as there were Windows 3.1 programs that would not work under Win 95, and Win95 programs that would not work under XP, and on down the line, it is simply the newer OS that older problems have an issue with. Whether it is 64 bit or 32 bit is not normally the problem, if a program runs fine under Vista 32 for instance, it should run just fine under Vista 64 (Or Win7 32 or 64) bit as well.
Advantages of 64-bit
There are several benefits of going to Windows 7 64-bit:
With 32-bit Windows, you can use a maximum of 4GB RAM. 64-bit Windows 7 runs very fast with 4GB and you can upgrade your RAM to 8 or 16 GB later, making your system future-proof.
A 32-bit OS can theoretically use up to 4 GB of RAM, but 32-bit versions of Windows Vista and Windows 7 see a maximum of 3.12 GB. With 64-bit Windows 7, you can use the full 4GB RAM.
You get better security with 64-bit Windows. All 64-bit device drivers are digitally signed, which means you will not have random crashes. You also get more advanced security features like Kernel Patch Protection with 64-bit Windows 7.
Since 64-bit systems process more information and support greater RAM, Windows 7 is more responsive when you are running complex applications or many applications simultaneously. If you use graphics applications like Photoshop, video editing, games, CAD, etc., you should go 64-bit.
Not all applications have 64-bit versions that take advantage of the 64-bit architecture, but you can expect more of them after Windows 7 goes mainstream. Meanwhile, most 32-bit applications work fine under 64-bit Windows. If any of them don’t for some reason, you can reasonably expect the application developers to fix any issues, because a lot of people will be running 64-bit Windows.