You can order an UPGRADE for 50 bucks, so you need Vista to be able to use this (but then you pay 50 bucks for basically the same as you already had).
Additionally, I do not recommend upgrades when installing a newer version of an OS. When switching from Vista to 7 it is better to do a completely fresh install, to decrease the risk of getting issues and to guarantee an OS that is as "fresh" and "clean" as possible.
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