A new important feature in Windows 7 is the Windows XP Mode. This function allows to run Windows XP based application without any hardware and software compatibility issues.
You can find more details on the article Secret No More: Revealing Windows XP Mode for Windows 7 ( WithinWindows.com )
XP Mode consists of the Virtual PC-based virtual environment and a fully licensed copy of Windows XP with Service Pack 3 (SP3). It will be made available, for free, to users of Windows 7 Professional, Enterprise, and Ultimate editions via a download from the Microsoft web site.
Also watch the video test on Youtube at the following link : Windows 7 RC - Testing Virtual Windows XP (XP Mode)