Don't bother with XP Mode, you don't want it's diskspace wastage on your system and it's only necessary for those really incompatible POS programs that won't run under Windows 7 32 bit support. What you are interested in is Microsoft Virtual PC only, no XP mode.
Windows 7 will run Microsoft Virtual PC instances of Ubuntu 10.04 LTS quite well. You do have to do a little tweaking of the parameter line to get it to load with the following grub parameter line
vga=791 noreplace-paravirt so Linux doesn't crash. There's also another mouse tweak needed to get the scroll button to work
i8042.noloop psmouse.proto=imps added to the above takes care of that. Don't expect sound on Ubuntu 10+ as they quit supporting ISA drivers and the Virtual PC emulates SoundBlaster 16.
Here's one of many threads on how to do this.
I have been running a Virtual PC instance of Ubuntu since 8.04 LTS for use in website development so I can use my Windows tools and yet run the website on its native OS. Helps quite a bit at making sure you don't have WAMP and MAMP glitches where the site WAS running fine, but crashes when you go live.
You can also load virtual DOS machines or Windows 98SE machines (extracting files from old backups), etc.