On the heels of the leak of the Windows 7 Release Candidate on Torrent Trackers there is word of a Windows XP Mode in Windows 7.
If the Windows XP Mode works as advertised Windows XP applications can be installed and run on Windows 7. This is a huge story for companies who in a large part still run Windows XP. Looks like Microsoft invested into this feature to make sure they can get the fast Windows XP install base and finally have them upgrade to a new OS.

According to Rafael Rivera and Paul Thurrott who got briefed on the Windows XP Mode in Windows 7 a month ago you can run Windows XP applications alongside Windows 7 applications under a single desktop. The Windows XP Mode is not a virtual instance that would make things less user friendly.
More details on the WinSuperSite. The WinSuperSite also has published screenshots of the Windows XP Mode. Via Techmeme.