I've been trying to read up a lot on the new Windows 7 coming out end of '09. I've heard lots of varying things on the real core which makes me feel somewhat wary on what to believe.
First, I've heard from numerous sources that Windows 7 will be based off the code from Vista, basically they will have very similar appearances. However, the basic core of the OS has been literally ripped out and re-worked. In Vista, they had to have two OS libraries running at all times, the new kernel (Vista itself) and the old kernel for backwards compatibility (the NT kernel used in XP). It is because of this that the OS became a huge resource hog and took up so much disk space for even the most basic installation. For Windows 7 the core was rebuilt so it does not run the old kernel as well. Backwards compatibility will be handled in a form of emulator that will run the software or other utility as if it were in the desired OS kernel. The good news there is less resources will be used in general. The bad news is it could cause slight performance issues with older software.
The new core is also much smaller as much of the added "stuff" was condensed and ripped from the inner core of the OS. One source I read said they could have a fully functioning OS from this new core within 2GB of total disk space and run efficiently with just 512 MB of RAM. This, however, did not include the full graphic interface.
Many of the standard utilities within Windows will be getting an update as well, such as additional functions and features in the Calculator, as well as updates to Notepad and Wordpad.
The big thing being discussed about Windows 7 is support for multi-touch interface, which Windows is already trying to push with its Windows Surface, and they are striving for interconnectivity of all kinds of devices. This means that your smart phone with Windows 7 will be able to transfer information wirelessly back and forth with your desktop, laptop, a computer in your car, other cell phones, etc. with ease and no cross-conversion of data from type to type and from one program to a different program on the other side.