Well… sorta…
All the technical stuff is here.
For those who just want to cut to the chase: it would appear that Win7 is going to include a license for WinXP and a means to run that environment via virtual mode. It won’t be included on the box DVD - you’ll have to download the feature (but it will be free… just take bandwidth and time). So then some of you are asking, “What’s the point? I already own XP.” What it means, is that Win7 will have a surefire means to run XP compatible programs. Remember the horror we Vista 64-bit owners felt, when stuff (including our precious bgames) wouldn’t run on it? Not so with Win7. Of course this is all moot, if you’re not going to upgrade to Win7 and whatnot…
But yea… if someone asks, “I can’t run Princess Waltz in Windows 7,” just tell 'em to run it in the WinXP virtual mode.
Take note that this free XP mode is ONLY included with Windows 7 Professional, Enterprise, and Ultimate.