Window 7 Pro and above come with Virtual XP SP3
Looks like the new Windows 7 OS in versions Pro and above will support a free addon which creates a seamless VM layer of XP SP3 for full application compatibility. Other new features inculde streaming of your Windows Media Player library over the internet.
Gizmodo - Windows 7 Release Candidate 1's Best Surprise New Features - Windows 7 RC1
This is simmilar to the approach taken by Mac OSX with OS9 support in that it seems to be the whole OS. Previously they have employed the rather than the more compact and optimized backwards compatibility model of WoW (Windows on Windows) but it should mean that support will be almost total rather than the slightly more limited support found in WoW mode. This feature does require processor VT support and is probably the last development of their virtual pc client virtualization product line. Future client OSs will most probably have fully fledged hyper-V hypervisors.