Read about it here

The most important thing here (and a game changer I believe for Microsoft) is

Windows XP Mode (XPM…) … in short, is a "Virtual PC-based virtual environment" which houses a fully licensed edition of Windows XP SP3 well-integrated into your system -- you don't actually have to run anything from a separate desktop … just install games or applications inside the … [Virtual XP Machine] … and they are published … with shortcuts … in the [Win 7 regular] start menu

This may finally be what I have been waiting for to see the Vista Win 7 OS make some headway.  And should hopefully help MS’s bottom line in the last quarter.  The corporate client can now safely install Vista Win 7 and know the legacy software they have to support will continue to work, in the XPM.