SQL Server is supported on Windows 7, but you may need to apply the latest Service Pack level to be supported. 

Here are the supported products and SP levels:

• SQL Server 2005: SP3 is required
• SQL Server 2008: SP1 is required
• SQL Server 2008 R2 CTP3:Supported without any additional updates

The service pack for each of these products are available through Microsoft Update, as mentioned in these blogs:

• SQL Server 2008 SP1 on Microsoft Update
• SQL Server 2005 SP3 on Microsoft Update

Known Issues:

• “Invoke or BeginInvoke cannot be called on a control until the window handle has been created.”  error. Details are posted here.

Other comments:

• If you will be setting up a SQL Server 2008 cluster on Windows 7, you will need to perform a slipstream installation. See here for details.
• SQL Server 2008 Express Runtime ships with Service Pack 1: http://blogs.msdn.com/sqlexpress/archive/2009/06/15/installing-sql-server-2008-guidance.aspx 
• SQL Server 2005 Express runtime ships with Service Pack 3: http://www.microsoft.com/downloads/details.aspx?familyid=3181842A-4090-4431-ACDD-9A1C832E65A6&displaylang=en
• Ensure you are running the correct Service Pack language, otherwise the service pack will not update all components.

Additional information can be found in KB 955725, which is being updated to reflect the final Windows 7 Release.