So far, I've not had too many problems with little command-line DOS apps.
If you do get a problem one (usually 64-bit systems will give the most problems), give DOSbox a try. It's a nice little open-source DOS/x86 emulator.
http://www.windowsreference.com/fre...pensource-dos-x86-emulator-for-windows-linux/
Other than that, to the OP...
I'm happy with Win7 on my new system.
I don't know if I would upgrade an old system from XP to 7...all depends on the age of the hardware I suppose. Older hardware I'm content with sticking to XP.
OpenOffice works just fine for me on Win 7. I decided to stick with that since I use it quite a bit on Linux anyway.
I also have my old copy of MSOffice 2002 installed for those odd-few XLS worksheets with macros (like the AvHistory FDE spreadsheets) since O

rg doesn't play well with most MSOffice macros.
(7 does have some issues with Outlook2002 too...but I haven't used that for email in quite a while).