That's the old Windows with all your data and so on. If you're sure you don't need anything of it anymore, you can delete it.
The best way to delete it is with shift-delete from Explorer (or whatever it's called in Windows 7).
I just upgraded to windows 7 and noticed on my C drive i have old windows xp files do i really need them? because it is taking 75 GB of hard drive space, if not then what is the best way to delete them?