Reformat Windows Xp 32 bit hard drive as NTFS to accept Windows 7 install.

My Acer Aspire has Windows7 Ultimate. Love it. So I bought Windows7 Home Premium for my husband’s Acer. I performed a clean install on it.
It works so well- I’m on a roll so I decided to install on my little Acer Aspire One notebook (netbook??) which currently runs 32bit xp OS .
But I can’t install it.. It has to be formatted as NTFS first.
How do I do that?