This could bode well for GOG compatibility on Windows 7. Sounds a little more comprehensive than checking "xp sp3 compatibility" in Vista.
http://butch.impulsedriven.net/article/349031/Windows_7_Secret_Feature_revealed

yeah, 7 may not be faster than it's 9 year old brother XP, but with the backwards compatibility, it makes it superior.
I'm totally switching as long as this stays good.

The question is... can I survive on my old XP box until Windows 7 hits the shops? Or will I be forced to use Vista, if only for a short time...

I've been using Vista since last December, and I haven't had much issues with it so far.
The only problem I really have is that it's putting my files all over the place, and I like to micromanage where I put things on my hard drive. Vista kind of seems to take that freedom away.
Other than that, after finishing my tweaking. I haven't seen a single BSOD nor had much issues with Vista as a whole. The only problem it might have is that it's a resource hog, and you need beyond decent hardware to run it. Which I admit is a fault if you're looking at an OS.
I'm quite pleased that Microsoft is still trying to maintain backward compatibility in some ways. For the abandonware scene, as well as the folks who like their old good games it might make things a little easier to run them ol' programs. ^.^
If I were you Andy, I'd wait on purchasing Vista a little longer though. Microsoft has supposedly a deal in the works going that folks who buy Vista in July and later can upgrade to windows 7 for free! Check the source of that kind of deal in link below:
http://www.techarp.com/showarticle.aspx?artno=609&pgno=0
General consensus seems to be that any Vista license bought from 1st of July 2009 and onward is viable for a free upgrade to 7. So perhaps patience is a virtue in this? ;-)
Edit: MS hasn't confirmed nor denied this, changed my post a bit to make that more clear.

Unfortunately it sounds like you have to own a retail copy of Windows XP in order to take advantage of a feature that is not included in the base installation of Windows 7.
From what I could tell it's an updated version of Microsoft Virtual PC. :|

That's not how I understand it from the various articles and screenshots, it seems like a custom Virtual PC build with a tweaked XP version.
The integration feature looks interesting, I wonder if they are only for this "Virtual XP" or if other virtual machine can use them and if there is a SDK available allowing others (VMWare, Virtual Box) to take advantage of it.

That's more of a misunderstaning on your part of the filing vaguaries within Vista. It is so easy to carry a torch and pitchfork for something you don't understand, look at Frankensteins monster.

XP Mode includes a fully licensed copy of XP SP3 for free. Note that at this point in time it is only available for those using Windows 7 Professional, Enterprise, or Ultimate. Of course, since Virtual PC is free nothing stops you downloading the new version and doing this yourself, although you will need your own retail XP license.
This is probably part of the Virtual Machine Additions, an enhancement pack that only supports Windows OSes and only works within Virtual PC. VMware already offers a comparable feature in Fusion and Server, but neither are free. This technology may be available to earlier versions of Windows as well (as with previous versions of Virtual Machine Additions), but it will certainly not be available for non-Windows guest OSes.

maybe I read that too quickly, but does XP mode require the disc be patch to sp3?

The XP Mode download includes a pre-patched XP SP3 (presumably pre-installed). XP Mode does not come with 7; it is a separate download, much like the Live Essentials, and comes with everything required; no disc is needed.

Is that mentioned in the article? If so, geez I am so blind. :|
If that's true, that's really awesome.

I'd vote you go for the release candidate until then.

Do any of the virtualisation apps allow you to access the video hardware? All the ones I've tried have included only a generic display adapter thats total crap for anything other than basic desktop apps

It wasn't particularly clear in the original article; Rafael's Windows XP Mode Internals - Part 1 (Overview) clarifies that the download includes a "VHD package – containing a preinstalled, shrink-wrapped copy of Windows XP with SP3". VHDs ("Virtual Hard Drives") are self-contained images and have no external dependencies (just like ISOs of CDs and DVDs).
VirtualBox, VMware Server, and VMware Workstation have preliminary 3D support. Unfortunately, there is no GPU equivalent of the hardware-assisted virtualisation incorporated into most modern CPUs (which allows the VM to see the real CPU and access it directly at native speed); this means all instructions have to be converted before being given to the real hardware, so you should not expect usable speeds for the most demanding games. Neither implementation is feature-complete, so many games will run with problems or not at all.

As I already posted in the Windows 7 gets XP Virtualization thread, this is not for the Starter and Home Premium editions.
Most consumers will probably end up with the Home Premium edition.
So we have to see how GOG will deal with this.
Perhaps the games will require (almost) no tweaking to run under W7 as MS has claimed that the move from Vista to W7 won't be as big as that from XP to Vista.