Hi Charlotte,
There is a very good reason to use the Windows recommended program I linked to. It will copy everything you need, to have your new computer set up exactly as your old one was. E.g it copies all your userfiles, drivers etc and even things like yours browser bookmarks and the like. You don't have to do anything, so if you're not a confident techie you can't go wrong. Just plug in your external hard drive and away you go.
The progam won't copy anything from XP that isn't needed. Remember you can't actually upgrade from XP to Windows 7. When you are changing from XP to 7 on the same computer it is a clean install. So, having everything set up the way I had it on XP was very useful.
As others have stated, you will have to re-install all progams, such as Office, email progams, etc.
Jamjar