Windows 7 Home Basic - This version of Windows 7 will only be sold with new low-end PCs in other countries. It targeted at emerging markets. In fact, it will not be available outside of emerging markets. So you can simply pretend it does not exist.
Windows 7 Starter - includes the basic Windows 7 feature set. You get the basic user interface, Windows Basic, but not Windows Aero, which provides the "glass" windows and Aero Desktop Enhancements such as Aero Peek, Aero Snaps, Aero Shake, Aero Background, and the like. You get Windows Search, Action Center, Windows Firewall and User Account Control (UAC), Parental Controls, Windows ReadyDrive, Windows Backup with system image capabilities (but not network-based backups), Internet Explorer 8, Windows Gadgets, Games Explorer with basic games only (FreeCell, Hearts, Minesweeper, Purble Palace, Solitaire, and Spider Solitaire), and a basic set of utilities like Calculator, Paint, Windows Fax and Scan, WordPad, and XP Viewer.
Windows 7 Home Premium - Moving up to Windows 7 Home Premium, the picture improves dramatically, and I believe that most consumers will be happy with the feature set provided by this version. Windows 7 Home Premium builds on the core feature set from Windows 7 Starter, adding the wonderful Windows Aero user interface as well as all the nice Aero Desktop Enhancements that are unique to this Windows version. You get Windows Flip 3D, Live Taskbar Thumbnails, and live icon previews in Explorer. The net gain here is a user interface that is both more attractive and more efficient than the one provided with Starter. In fact, these UI improvements are, as far as I'm concerned, reason enough to upgrade. But there's more.
Windows 7 Professional - The leap from Windows 7 Home Premium to Professional is quite a bit less profound, though of course certain people will simply have to get this version because it includes key business-oriented features like support for Active Directory-based domains. Windows 7 Professional users also gain access to Windows XP Mode, a fully-licensed version of Windows XP with Service Pack 3 that runs in a virtual machine under Windows Virtual PC and lets you solve any lingering compatibility issues caused by the big upgrade to Windows 7.
Windows 7 Ultimate - Includes every single Windows 7 feature, compared to Windows 7 Professional, however, there are only a few key functional differences that apply to individuals, making this a pretty uninteresting upgrade - the BitLocker and BitLocker To Go drive encryption technologies; and Microsoft's managed corporate customers. None are particularly interesting or relevant to individuals. If you can live without that however--perhaps by using a third party disk encryption tool, then you can safely ignore Windows 7 Ultimate.
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