That's not true, it's just a handy excuse people toss up when they don't know what they're talking about.
Probably better than 99% of all software that worked on XP will work on 7. There are a few little caveats however. If your new system is a 64-bit system, then older 16-bit programs will not work because there is no 16-bit subsystem in the 64-bit version. Ultimately this is a good thing, because 16-bit apps are able to bypass all the normal protections Microsoft started adding to Windows starting with Win95 and bring down the entire system quite easily. The same goes for a lot of older DOS programs, but those would have had issues working on XP as well, when Microsoft started enforcing the rule of no programs directly accessing the hardware. Some programs may depend on depreciated APIs that were removed in either Vista or Win7, in which case you'll just need to find a new version of the program or an alternative to the program.
Also, have you tried the compatibility modes that have been a standard part of Windows since XP SP2? There's no guarantee they'll work, but it's already on your system, so why not at least give it a try?
Finally, there is the Pro version of Win7, which has the XP Mode option. You run a copy of XP in a virtual machine in essence, but this is really one of those options that should be considered a last resort for some program you absolutely must have and there are absolutely no alternatives anywhere that will meet your needs. There comes a point when clinging to a particular version of software just isn't worth it anymore. Learn a lesson from the financial industry during the whole Y2K thing. They've been clinging to these ancient COBOL programs written in the 1970s when memory was so scarce they truncated the year to just the last two digits because every byte counted. They kept using the same software for around 30 years, and it eventually cost each of them MILLIONS individually to fix. At any point along the way, had they spent maybe 10 grand to hire someone to recreate the program in a more modern language, they would have saved themselves huge piles of cash come that fateful day about 11 years ago. At some point you have to be willing to say that it just isn't worth going to such great lengths to try and save a particular piece of software.
I recently bought a new pc with Win7 because my old pc with Win XP (5 years old) was failing in addition to being very slow. All of my software from Win95 to WinXP worked on my old XP pc. My new pc is Win7 Home Premium and I cannot get any of my older software to work. I've since learned that Win 7 Home Premium is not compatible with WinXP and earlier software. I do not want to spend hundreds of $$ buying new software, especially since some of my favorite programs are no longer available. Is there any way to use my older software with Win 7 Home Premium? Thanks.