First step: Backup everything; I use this tool to get a complete snapshot image of the hard drive so that I can easily get any missing files later that may have been missed when copying data files out of that image.
Drive Snapshot (backup free for first 30 days, restore is always free)
Second step: Factory Restore (if you can), or else you'll need to get a Windows 7 CD-ROM. You'll need to know the following information first:
Windows 7 product key (usually a sticker on the outside of your machine, often on the bottom or one of the sides of the chassis)
32-bit or 64-bit requirement (if the product key sticker shows 64-bit, then go this route because you'll get better performance)
Network driver information (and be sure to have a copy of this driver on a CD or USB memory stick so that you can install it manually if it's not included with the Windows 7 installation)
As a favour to yourself, make sure you have all the needed hardware drivers before-hand, and store them on the same CD or USB memory stick with your network drivers. At the very least, make sure you have video and audio drivers. Most PC vendors provide a "support" web site where you can enter your computer's model number and download the needed drivers from there.
Third step: Install Windows 7 (factory restore will have all the drivers included, but if you're using a regular Windows 7 installation CD then make sure you at least get that network driver prepared ahead of time). WARNING: THIS STEP WILL ERASE ALL THE DATA ON YOUR HARD DRIVE!
Fourth step: Mount the snapshot image of your hard drive as a virtual drive letter and copy your data files back to your newly installed Windows 7 environment. Keep this snapshot backup image for at least a few months so that you can find other files as needed should realize at some later point that you might have missed something.