This is an interesting article from GCN: http://gcn.com/articles/2009/07/27/gcn-lab-windows-7-performance-tests.aspx
So if you are a Public Sector developer out there using Windows XP and you can't use Visual Studio 2008, there's hope for you.
I'm personally aware that it (VS 2008) runs well on a netbook with 512MB of ram. (right Joel? <grin>)
So, is Windows 7 expensive? Well, that depends on how you look at it - its certainly cheaper than a new machine!
In public sector DPE we're looking forward to hearing about all of your resurrected hardware!