Get a new hard disk (makes life easier), install Win7 on it, and install something like VirtualBox or other virtual server software, then follow the relevant instructions to either set up a VM using the old hard disk or clone it as a virtual disk image. This method leaves your XP data intact.
That lets you run XP stuff at the same time as Win7. You can set up the networking for the XP side so it can't see the outside world too. You can use your stuff on XP until you get around to installing and configuring it on the Win7 machine. It's possible to set up folders on the Win7 machine that appear as shared drives on the XP machine so moving data between them is relatively easy if you want to copy application data across.