You can actually ignore the warning and just go ahead and upgrade to windows 7 and after the upgrade is done, download the latest ati drivers from ati's website, uninstall the old catalyst control center through the control panel, and after the reboot install the new ones
Try Grumpy's suggestion of removing from control panel first. But, if this does not work you can try removing/uninstalling it from context menu. To do this open regedit and go to KEY_CLASSES_ROOT\Directory\Background\shellex\Cont extMenuHandlers\ACE and remove the key named “ACE”
PS - Good job for running the Upgrade Advisor! Many people upgrade without doing so and then regret it later.
Have fun with Windows 7!
Microsoft Windows Outreach