This is true and I have no idea what doing a clean install might do to your warrenty? if anything, but you can use an upgrade to do a clean install, you don't have to do an upgrade. The disk works either way. It is just easier for your average user to upgrade than to do a clean install (actually I think they are the same as far as difficulty, which is 0). My disk was useable either way, you could upgrade XP, Vista or another form of Windows 7, or you can do a reboot and clean install. It's your call. I did a clean install and I love it and how it works.
By the way, old versions of Musicmatch Jukebox (pre Yahoo screw-up) install in XP Compatibility mode and work perfectly under Windows 7. Nero also says it is incompatable (they are putting out a compatable version in October) but in reality any version or nero should install in XP C Mode and work. I installed Nero 7 (2007 version) and it works perfectly.