You can do either of those options really. If you dont want to have to reinstall all your applications then the image option is the best. However you must be care in that Win 7 has a 100 MB Partition that it sets up at install which needs to be factored in. You could do a Backup using Win 7 Back Up and then do a Recovery to the new drive. If you want a nice fresh install then install Win 7 on the new drive and copy the basic data over such as pictures, documents etc. Personally I would go for the Fresh Install.