I'll admit, I've been running Windows 7 for six months now: the preproduction version of it and have just upgraded to the gold code. So I have quite a bit of experience with the operating system. Let's get to the nitty gritty:

Should you upgrade from Windows Vista? YES! I mean it - upgrade today.
Windows 7 is quite simply faster, more stable, boots faster, goes to sleep faster, comes back from sleep faster, manages your files better and on top of that it's beautiful to look at and easy to use. Even the preproduction version of Windows 7 was better than my Vista with SP2.

Should you upgrade from Windows XP? Maybe, but for different reasons.
XP is a good operating system and if you don't need to add new hardware or software, XP is good. However, XP is old as an operating system. Also chances are that if you're running XP, you might not meet the minimum requirements for Windows 7 - check the compatibility site at Microsoft to see if your system will support Windows 7. That said, Windows 7 is light years ahead of Windows XP in terms of functionality, ease of use, etc - to me it's worth buying a new system.

64 bit or 32 bit?
If you don't know what I'm talking about, that's ok skip this section. If you have a core2 duo or core 2 quad or a multi cpu machine, go with the 64 bit OS, it handles memory and the CPUs much better. If you have a single core CPU, one CPU or run special programs that require 32bit, then stick with 32 bit for now.

BEFORE INSTALLATION:
I recommend you have:
-a core 2 duo or core 2 quad machine
-4gig of RAM (That's about $50 in today's market)
-good hard drive with (200 gig - it doesn't need that much but that's another $50)
-back up your files to a USB drive like Western Digital My Passport Essential 500 GB USB 2.0 Portable External Hard Drive WDME5000TN (Midnight Black)
-check to make sure your computer is compatible with Windows 7

INSTALLATION:
Installation was very straight forward. You put in the CD and reboot your machine. You might have to enter your bios and enable the "boot from CD" option. Once the machine reboots a nice screen comes up to guide you through the installation. You have the option to upgrade your PC or do a clean installation. I did an upgrade and it brought in all of my files and settings from my windows Vista system. It worked great.
The upgrade did take about 2 hours for me so definitely consider.
I noticed that early on in the installation the operating system went out to Microsoft's site to look for the latest and greatest updates, so I think this should help Microsoft respond quickly to any hiccups with compatibility.

WHAT DOESN'T WORK:
The driver from my old HP Inkjet printer for 2001 doesn't work on Windows 7 so there are some things that will not transition. I had to use a generic HP driver which doesn't give me the quality that I got from an injet - so overall, I'm up and running with that printer but I'm degraded on the inkjet front. That said, I recently upgraded to a HP CP2025DN Color LaserJet Printer that I love so no real loss there. I'll likely pick up a cheap inkjet for the occasional photo that I might need to print. Everything else upgraded.

BENEFITS
-faster boot time
-faster go to sleep
-faster wakeup
-faster about 20% to 30% faster at running applications than my Vista - seriously (but those are my results without any benchmarks or anything like that, just seeing how fast Adobe Illustrator loads, and how fast all the applications respond)
-joining wireless networks is much easier
-the interface is just plain beautiful
-my wallpapers are now a slideshow that can be set to change every few minutes (I'm not stuck with the same picture)
-Gadgets - these are wonderful little small applications that you can drag onto your desktop. I have a weather gadget and a calendar gadget on my desktop that tell me
-Better taskbar management - hovering over the taskbar icons shows me mini windows of what's running
-Better file management - I can organize my files into Libraries that are sortable not only by type but by folder or other data. It's great! I can browse through my presentations or illustrator files!
-Windows Media appears to be smoother which I love.
-You get some virus protection and firewall with Windows 7 but consider something more comprehensive like McAfee Total Protection 3User 2010. Yes, it'll make your computer run a bit slower but

CONS:
- Some older programs might not work and some drivers might not be available like my inkjet driver.
- Other than that, there aren't too many drawbacks to Windows 7 - it's a great OS.

WHICH VERSION SHOULD I GET?
I got the ultimate version because I have clients who ask, "is your hard drive encrypted?" -- I wanted to be able to say yes and have sensitive data encrypted one of my computer volumes - Bitlocker is only available in the Ultimate version. Ultimate also includes Multilanguage support.

If you're a home user that doesn't do a lot of networking, you might consider just the home premium edition. If you're using a laptop and connect to networks at work, you might want the Professional version of the operating system to help you with domain joining. Also Windows Professional gives you the option to run applications in XP mode so if you have old applications you can use that nifty feature. I already have 1 application running in XP mode - it's nifty to run an old application.

NOTE:
The box contains both the 32 bit and 64 bit OS.

OVERALL:
It's very hard to write a comprehensive review on an entire operating system so I didn't even try - I'm sure magazines will devote entire articles to the operating system and several books will come out. My goal here is just to give everyone a glimpse of what I've found to date with this new OS. I do hope this has helped you in making a decision.

Hats off to Microsoft on Windows 7. It's more of a refined Windows Vista than an entirely new operating system but it was needed. Thank you.