Good questiions
You can do an upgrade install with 7 and save everything, but its not as good as a clean install where you lose everything.
All in the know agree that clean is better than upgrade (you can use an upgrade DVD for either) Its about 120 dollars USA, Home Premium
At this point, if you want to reinstall Seven is the way to go.
I had Vista, for a year. I went with 7, July of last year. They had the preorder special for $49.99 Home Premium
If you decide to go with Seven, post here. I will give you all kinds of information so it is done correctly
Summary
Upgrade- you save everything but not the best way
Clean install the best way but you lose documents.
Why not back up your stuff, now?