So this week I will be making the big jump from Windows XP Home 32-bit to Windows 7 Home Premium 32-bit and I just wanted to know if anyone has done this upgrade recently and if they have encountered any issues with game or hardware compatibility.

Naturally the biggest thing I'm looking forward to is the ability to use Direct X 11 in future games. Up to now I've still been stuck with Direct X 9.

I made the same jump (yes to 32 bit Win7). Still wanting to test DirectX 10 stuff, but haven't had time to even look at that.

I have had zero hardware issues. The few games I've installed and tested work fine so far.

My system is handling very nicely with Windows 7 32 bit. Quite impressed.

I don't see the "What you hear" or "Stereo Mix" option in my audio recording panel. It wasn't in the RC, and I'd read that it was out for good. I got occasional use of that feature, so I'll have to see what my options are on that.

Cant post a screenshot here but:
rightclick the speaker icon bottom left of screen, select Recording devices.
You will see devices like Microphone, CD Audio, Line In....
some devices are hidden, so rightclick anywhere here and mark Show Disabled Devices.

This shows Stereo Mix on my w7x64, but only after I've installed the manufacturers own drivers (RealTek)

When I went from XP 32b to Vista 64b, some application software (expensive) would not work. And, there were driver issues for some hardware. I went through the pain and expense of getting things to work with Vista. I kept XP as a dual boot.

Since then, I upgraded CPU, MB, GPU.

So, my system works OK going from Vista to Windows 7 64b -- only one application needs an update. Games and older hardware actually seem MORE compatible with Windows 7 than Vista (where I can perceive a difference). Apparently, they got the drivers mostly right for Windows 7. All the drivers I needed were on the disk or downloaded automatically -- painless (at least in my case).

I've formatted my XP drive. Just don't need Windows XP for anything anymore. Really don't need Vista either but its still there.