A Mixed Review For Windows 7's XP Mode
The Register writes "If one thing excited people more than the disclosure of the Windows 7 Release Candidate's availability, it was the news of Windows 7 XP Mode. The Reg's Tim Anderson gave Windows XP Mode a mixed report in his review of the Windows 7/Virtual PC combo. Overall, the level of integration is excellent and Windows XP Mode showed strong potential. However, responsiveness of applications was sluggish and the seamless integration between Windows 7 and XP proved confusing."
When I moved to Vista x64 I created a few VMWare XP virtual machines and it did ease the pain of having a handful of applications that wouldn't run under Vista. It's probably not aimed so much at mainstream applications that will have any Windows 7 incompatibilities patched quickly, more at a few legacy niche applications that may otherwise prevent an enterprise from moving to Windows 7.
As another example I have a few USB device programmers and other electronics gear that are end of life so don't have Vista USB drivers, however they would have been expensive to replace so there's no way I would have moved to Vista without being able to use them under a VM.