Upgrade xp to windows 7 in Boot camp

You shouldn't have any trouble upgrading in place, just be aware that upgrading to 7 requires you to erase the XP partition; this isn't because of Boot Camp, it's what any XP user has to do because 7 utilizes a different file system. You do not need to delete the partition and re-run Boot Camp Assistant. Just be sure to run your 10.6 install DVD to put on the basic drivers and then run Apple Software Update (while booted into Windows) to install the relevant 32- or 64-bit Boot Camp 3.1 update.

Also you could buy the XP to 7 upgrade disc and it will give you all the relevant instructions:

http://www.amazon.com/Microsoft-Windows-Anytime-Upgrade-Professional/dp/B002JYU5WI/ref=sr_1_fkmr0_2?ie=UTF8&qid=1282754785&sr=8-2-fkmr0

Here's a webpage that explains, in detail, on what happens and how to upgrade from Windows XP to Windows 7.

http://www.winsupersite.com/win7/win7_upgrade_02.asp

I hope you like Windows 7. Personally, I love it and I believe that it works best on Apple hardware

Upgrade Disk

So will the upgrade disk of Windows 7 work if I already have XP installed?
I know it has to be a clean install and have no problem with that but don't want to buy this: http://bit.ly/bY81l0 and have it not work.

Yep. It will work.