windows 7 will have near complete xp compatibility

A new feature being announced is XP mode for Windows 7.  XP mode is essentially an application running in a Virtual PC virtual environment.  Installing the application in the virtual pc environment will result in it being published to windows 7 as an application.  The requirements for this technology includes processor virtualization support (Intel VT or AMD-V).  It will be a separate out of band update released in final form to coincide with the release of windows 7 (so it's not actually built in).  Paul Thurrott has a nice set of screen shots on the whole thing here: http://www.winsupersite.com/win7/xp_mode_pre_shots.asp