Microsoft launched a page that clearly explains how to upgrade your existing system in-place from a legacy Windows OS to any Windows Vista version; or, in the case of certain systems, whether you'll need to perform a completely clean installation. Certain legacy OS' require a full system installation while others will allow for an in-place upgrade. Depending on where you're coming from and where you're going, you should determine which scenario applies to you.
Link: Upgrade Planning for Windows Vista
News source: Activewin