The upgrade is an option in your case. The only time you'd really buy the full retail version is if you were planning to build a new system, or had an insane hatred of having to prove eligibility during the install process, and were willing to pay a hefty premium to avoid that.
My cpu is 32 bit system and running Windows Vista Home Premium, basically what my computer came with. I am interested in installing Windows 7 but I am not sure if I should purchase the upgrade or the full version.

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