What you get approved by the WGA folks is always allowed to float. Per the reading of the EULA that I was given by a MS LCA person (Legal & other stuff) during her down-time, the EULA only supports an upgrade, once you've upgraded, that's game over for the license on the other/older copy.

Now, I'm not a legal expert, no matter what any of my degrees may mention, so do not take this as legal advice.

Per my read of the Vista Upgrade EULA, once you upgrade, you voluntarily give up your old license, which MS revokes.

There will likely be a technical provision enacted to enforce that giving up of your prior license in future prime, but for now, just run it by the WGA folks on the phone, and if they OK it, you know you're on the right side of the license.

CSI -- Yes, you would need to use it, however, per the EULA of the UPGRADE version of Vista, you cannot do such, as it supports the upgrade exactly once.

Now, I can't talk to the legality of shrink-wrap licenses, even though it was a pet project of mine while going through college....

The point stands that MS can enact provisions to make your old key show up fully non-legit, within the bounds of their license, and it should not actually be technically difficult to implement.

To sum up, and save you a lot of potential trouble:

If you're buying just to go from XP to Vista once, buy UPGRADE

If you're buying to be able to transfer the license to that software to another computer later, or if you're planning on needing a clean install, or a re-install... Buy the full copy.

(Also, not that I expect any of you to do it, but watch out for Staple or Best-Buy doing "upgrades" for you.)