It appears that Windows 7 beta testers who are using the publicly available release candidate of the new OS will need to uninstall the pre-release software and re-install their valid Windows XP or Windows Vista edition before applying the final Windows 7 upgrade.
“When you install the final version of Windows 7, you’ll need to do a clean installation. So plan on backing up your data then reinstalling your applications and restoring your data.”
However, if you are purchasing a discounted, upgrade edition of Windows 7, you will need to first perform a clean install of a genuine edition of Windows XP or Vista before proceeding with the final Windows 7 upgrade. Windows Vista can be directly upgraded to Windows 7, while Windows XP requires a clean installation.
Microsoft provides instructions on how to uninstall the Pre-release version of Windows 7 and revert to a previous genuine operating system.