This is really great news for those guys who is having application compatibility issues with your old apps. Here’s what they had to say in the Windows Blog
Windows XP Mode is specifically designed to help small businesses move to Windows 7. Windows XP Mode provides you with the flexibility to run many older productivity applications on a Windows 7 based PC.
All you need to do is to install suitable applications directly in Windows XP Mode which is a virtual Windows XP environment running under Windows Virtual PC. The applications will be published to the Windows 7 desktop and then you can run them directly from Windows 7.
I will be waiting for Windows 7 RC which will be coming up in early May to test it out.