My desktop is taken care of, it has Vista Ultimate 64 and im getting the Windows 7 Ultimate Signature edition. 
 
My nettop however, takes a few more steps. I have an Acer Aspire One with XP Home on it at the momonet. I pre-ordered an upgrade copy of Windows 7 Home, here is my plan: 

• I borrow from my friend an external DVD drive along with a copy of Vista Home (no key, not cracked). 
• back up my stuff
• I install Vista Home clean without Activating it (since I kinda can't)
• Right after Installation, I install Service Pack 1 (since I read it is required to upgrade)
• Right after that installs, pop in Windows 7 Upgrade and begin the upgrade process.
• After the upgrade process, Activate Windows 7 Home

I've been running the Windows 7 7600 build RTM for a few months now, and I must say, the Ultimate edition is fucking beastly.
 
And to answer your question, that should be fine.

Thanks for your assessment 
 
Have you been running that build on your desktop machine or on a nettop? 

Why not just install Windows 7 straight over XP? I don't see the need for involving Vista. 

" Why not just install Windows 7 straight over XP? I don't see the need for involving Vista.  "

Yea if you're just backing all your stuff up anyway why not just do a clean install of 7?  On Amazon.co.uk the full version is actually cheaper than the upgrade version.  I'm sure if you shop around you'll find 7 for fairly cheap.  You skip the problems of the upgrade install too then

" Yea if you're just backing all your stuff up anyway why not just do a clean install of 7?  On Amazon.co.uk the full version is actually cheaper than the upgrade version.  I'm sure if you shop around you'll find 7 for fairly cheap.  You skip the problems of the upgrade install too then "

" @darkgoth678:   1.  Don't bother with a DVD drive, just use a USB key.  Simply mount the Win 7 DVD and copy everything over to the USB key...that's it!!!!! Plug into the AAO and boot select the USB HDD. 2.  There's no need to install Vista then do an upgrade.  From what I'm hearing, Win 7 Upgrade can be "clean installed" the same way that Vista was able to do.  Simply install Win 7 without key then reinstall Win 7 with key. "

For 7, you just need to copy the files over.  You don't need to set anything to make it bootable.
 
For the second part, you're just making it more complicated by installing Vista (and sounds like updating) before 7.
 
 http://www.winsupersite.com/showcase/winvista_upgrade_clean.asp
 
That trick should also work with Win 7.

" For 7, you just need to copy the files over.  You don't need to set anything to make it bootable.  For the second part, you're just making it more complicated by installing Vista (and sounds like updating) before 7.   http://www.winsupersite.com/showcase/winvista_upgrade_clean.asp  That trick should also work with Win 7. "

some plan you got there. i need to figure out a way to get 7 when i make my new rig

For multiple activations do you mean by multiple computers at the same time or re-installs? You would need a family pack for multiple computers, if you do re-installs it may require a call to microsoft. A clean install is always better to do anyhow since you would be starting out with a clean registry. Since you are backing up your files already just go from XP to 7 with a clean install its what I am doing.