Not only do you need the Pro, Business or Ultimate version of Windows 7 for XP mode. You will also need to download and install a Virtual Machine interface and a Windows XP virtual run-time in order to do so.
Search some of the reviews of XP mode under Windows 7, and you will find that the hardware requirements and performance are just as troubling.
I will still have the same hardware compatibility issues with Windows 7 that helped me decide not to upgrade my XP systems to Vista.
On the other hand, aside from the Vista interface being a lot different than the XP interface, many forget that we had just about as many software and hardware issues when people first transitioned from Windows 98 and 2000 to XP.
If you recall back then, when XP first came out it seamed like there were new compatibility patches for drivers and applications on an almost daily basis.
The goal for Windows 7 was never to make it fully compatible with XP. The goal for Windows 7 was to make users more willing to except Vista with a new name.
I have always considered Windows 7 to be either Vista SE or Vista Reloaded.
If you want to hear comments from Vista users that are really mad at Microsoft, look at any forum that the Vista Ultimate users are posting to. Not only do they feel that they did not get the features they were promised with Vista Ultimate, there is no reduced cost upgrade from Vista Ultimate to Windows 7 Ultimate.
Chas