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Find out if your computer is capable of Seven, from the upgrade advsior
Windows 7 Upgrade Advisor - Download - Microsoft Windows

You should then do a clean install, even if you have the cheaper upgrade Seven.
http://www.sevenforums.com/tutorials...on.html?filter[2]=General Tips

A clean install removes all the problems, virus etc. An upgrade covers them very neatly, but maybe not forever.

If you do an upgrade, your stuff will be saved, but you will most likely have problems down the road. Do the clean install.

This will tell you, however, if you can upgrade even though most here would agree that you should not upgrade but do a clean install.
http://windows.microsoft.com/en-us/w...ows-7?T1=tab02

I think that with your specs, Seven would not be a problem, but the upgrade advisor will pick up areas, as well, not shown in your specs, such as memory or hard drive problems

Take it from someone with experience: if you buy an upgrade license you might have to install Vista first and then perform the upgrade because 7 won't activate automatically otherwise. Microsoft might or might not help you with activation on a clean install of an upgrade license. However if you want to get 8 gb of ram you will have to have the 64-bit version of 7 and you can't upgrade to that from a 32 bit version. If that's the case Microsoft will have no choice but to help you with activation. Personally I don't see the point in having that much ram.