Windows 7 will have a Virtual XP Mode - reports indicate it will be effectively an instance of XP that runs in a Virtual Machine, but has its desktop integrated with the Windows 7 desktop.
XP Mode is in Beta stage - Windows 7 Virtual PC and XP Mode Betas can be downloaded to try with the Release Candidate:
http://www.microsoft.com/windows/vir.../download.aspx
The CPU it is to be used on must support Hardware Virtualization and this must be enabled in the BIOS.

