Clean Install Using Windows 7 RTM Upgrade

According to this article, you will need to have an activated copy of XP, Vista, or 7 RC first:

Now here's the bigger catch: While you won't need to downgrade from Windows 7 RC to Vista or XP in order to install Windows 7 final the first, time, you will need to install one of those operating systems and activate it first if you want to do a clean install in the future. Because the Windows 7 upgrade disc will only work with an activated version of Windows. That means you'll need an activated version of Windows XP, Vista, or Windows 7 RC to start with or the disc will be useless.

You can do it. Paul Thurrott documented atleast 3 different ways to do it:

http://www.winsupersite.com/win7/clean_install_upgrade_media.asp

Method #1: Just perform a clean install

Many, many readers report that they have been able to simply treat the Windows 7 Upgrade media as if it were Full media, and that it just works.

Method #2: Registry hack

• Change in HKEY_LOCAL_MACHINE/Software/Microsoft/Windows/CurrentVersion/Setup/OOBE/ value of MediaBootInstall from 1 to 0.
• Run as administrator following command slmgr /rearm
• Restart
• Start activate utility

Method #3: The good old "double install" method

• Install Windows 7 as custom install on clean hard drive
• Install Windows 7 again now as upgrade
• Activate it

See that link above for more details.

The upgrade versions will not do a clean install onto a blank hard drive. The install process will have to be started from an already installed and activated copy of windows. You will then be able to choose whether the install does an inplace upgrade (vista only) or installs a clean copy of Windows 7 (in which case the old windows files will be moved to a folder called Windows.Old).