As long as you are going from 32bit to 32bit, or 64bit to 64bit, all you need to do is insert the upgrade dvd in the Vista OS and run the setup.
You can not change from 32bit to 64bit with an inplace upgrade. A clean install would be required, ie: boot with the W7 dvd and start instalation
Please NOTE all data on the Vista partition will be lost in this case, so be sure to backup what you don't want to loose.
I suggest you compare the difference between Premium and Ultimate on the Microsoft page before paying out a lot of extra $$$ for things you may never need other than bragging rights.
A couple of the things that may be of use to you, may be available in the Professional version which costs less.
In case you are not aware the W7 Professional is more like the XP Professional, in that all things in the Home Premium are also available in the Professional version.
Unlike Vista, Media Center is included in W7 Professional.