Unfortunately, an upgrade install often can carries forward any problems that have crept into the old OS setup as well. To that, you may layer on incompatiblities that exist between the new OS and any applications or drivers that are already in place. Microsoft does seem to put quite a bit of effort into handling the challenges of upgrade installs, but my experience has been that they often end in sorrow. People are often reluctant to give up on an upgrade install because escaping from it is even more painful than a moving applications and data to a clean install. It's like being stuck in a bad relationship, but thinking you're better off with it than no relationship at all.
Clean installs have gotten a lot less painful with the Windows Easy Transfer (WET) tool. Once the OS has been cleanly installed, you can use WET to import the OS and application settings from the old setup. You still need to reinstall the applications themselves, but again this can be an opportunity to do a clean install of the most recent version or service pack level. WET can even be used to move settings across the same OS versions, such as Vista to Vista. In the past I've found that nagging problems in both the OS and applications can be eliminated this way.
For a company that's moving a large number of systems to Windows 7, Microsoft offers a utility called the User State Migration Tool (USMT). I've only used WET myself, but supposedly USMT shares the same core engine for migrating settings. If you're doing a large corporate deployment of Windows 7 and WET seems to migrate what you need during testing, it might be possible to use USMTfor the large-scale migration.
Once everything is migrated and stable, you'll eventually want to delete the WINDOWS.OLD directory that's left behind. It's also a very good idea to do a full defrag of the drive. The upgrade process usually turns the drive into Swiss cheese with all the file adds and deletes that go on. Windows 7 on a fragmented drive will perform poorly, but it won't be the fault of Windows 7.