I've been running Steam for years, though only in the last year or so with any games on it (I think they changed it after I got it so that only people with paid games could add friends, but there was a way around that for a time, at least, so I just used it for IMing) on Win XP and Win 7. I've only had to do one reinstall that was not part of a Windows reinstall, and that was due to the game directory getting so large I could no longer add games without filling up the hard drive - so I had to move it all to a larger drive. I did have some minor stability issues with the client at this point, but then again, I was trying to download about 100 games, so I'll cut it some slack, since that was stressing the software quite a bit.
The last reinstall I did (after my Windows bootloader borked due to the system crashing while a lot of data was being written to the disk) it actually kept all my games without having to redownload a single one.