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bill - 1:42 am on Oct 24, 2009 (gmt 0)
Deciphering Windows 7 Upgrades: The Official Chart [mossblog.allthingsd.com] This is an official chart supplied by Microsoft according to the accompanying blog post [mossblog.allthingsd.com]. You need to upgrade to the same version if you want the in place upgrade option. Otherwise you need the Ultimate version. It may be easier to get the Ultimate version to begin with in many cases.
Walt Mossberg of the Wall Street Journal has posted an upgrade matrix that shows which combinations of Windows editions will support in-place upgrades.
Another alternative upgrade method I have seen suggested is to perform the in place upgrade to the appropriate version, and then take advantage of the Windows Anytime Upgrade (or WAU). This allows you to upgrade to a higher level of Windows 7 at any time. You would have to pay for this upgrade though.
Despite the convenience that an upgrade offers, I would always recommend a clean install of a new OS. You will save yourself a lot of problems in the long-run.