Its the latest good Windows. 8 and 10 are spying everything you do and them are slower than Windows 7. When support ends I will switch to linux.

Short guide to make this OS leightning-fast: disable useless services, disable visual styles, install xplorer2 for file management and bbClean shell.

Although Windows 7 does have (decent) backup capabilities it should not be tagged "backup".

I used the demo awhile back and its a great OS. I look forward to upgrading to it for my next computer

Unlike Vista, which only introduced pretty colors and pretty annoying UAC, Windows 7 is clearly better than its predecessor (though the bar may have been set a bit low). UAC can be toned down instead of just plain shut off, though I still prefer to turn it off completely. The new taskbar is a massive improvement of the traditional taskbar of the Windows OS. And there are lots of other cool stuff, too.

With Windows 7 you do not need a special defragmentation application as listed in (3):
One of the aspects that has evolved in Windows 7, compared with Windows Vista, involves the operating system's capabilities to glue back together disparate fragments of files that have become fragmented as a natural consequence of hard disk use. “The defragmentation engine and experience in Windows 7 has been revamped based on continuous and holistic analysis of impact on system responsiveness,” Rajeev Nagar and Matt Garson, both program managers on the Windows 7 File System feature team, revealed.
(1) http://news.softpedia.com/news/Windows-7-Defragmentation-Engine-the-Evolution-102941.shtml
(2) http://bit.ly/7EInfk
(3) http://alternativeto.net/SearchResult.aspx?profile=all&search=defrag%20defragmentation&category=desktop

Only One "System Image" with Windows 7 Backup-Function:
It looks in such a way, as if in each case only one (the latter) system image remains. Further past system images are always overwritten by the latter. If one wants to have the possibility of restoring the next to last or before-next to last "System Image" then one must use e.g. a specialized system backup software as "Macrium Reflect Free Edition" or "Acronis True Image Home":
http://alternativeto.net/desktop/macrium-reflect/
http://alternativeto.net/desktop/acronis-true-image/

PRO:
Windows 7 Backup deletes old backup files automatically, if the Backup Hard Disk is 35% full.
CON:
You cannot select, that Windows 7 Backup deletes old backup files automatically, if the Backup hard disk is 90% full.
If you want to configure the automatically cleaning up of old backups very comfortable, you must use Acronis True Image Home or Ghost from Symantec.

Yes, you can: Access single files from an entire Windows 7 computer backup (VHD File):
Description from http://4sysops.com/archives/mount-vhd-files-in-windows-7-and-vista/

The Windows 7 backup tool, which allows you to create a system image, uses the VHD format. This backup program was introduced in Windows Vista and has been improved significantly in Windows 7.

Normally you can mount a VHD image with Virtual PC.

In Windows 7, you can use the Disk Management applet of the Computer Management tool to attach, i.e. mount a VHD file. This also works with Vista’s backup images. Disk Management can be accessed by right clicking on “Computer” in the Start Menu and selecting “Manage”. In the Action Menu, you will find the “Attach VHD” option. This will mount the VHD file to a drive letter:
http://screencast.com/t/OWNiNTllMTQ
After mounting the VHD file to a drive letter you can restore each file you want from the Windows 7 backup, similar as you can do this from images created with Ghost, Acronis True Image or Macrium Reflect Free Edition.

All editions of Windows 7 can make System Images without additional (commercial) backup programs, which were necessary for this purpose for system backups of Windows XP or Vista.
Details see: http://windows.microsoft.com/en-US/windows7/How-does-Windows-choose-which-files-to-back-up :

If the drive, you are saving your backup on, is formatted using the NTFS file system and has enough disk space, a system image of your programs, Windows, and all drivers and registry settings is also included in the backup.

A system image (VHD-file) is an exact copy of a drive. By default, a system image includes the drive required for Windows to run. It also includes Windows and your system settings, programs, and files.

You can use a system image to restore the contents of your computer, if your hard disk or computer ever stops working.
You have available two options:
(A) Restore the complete partition with Windows 7 (complete Drive C) using the Windows 7 Rescue CD
(B) Access and restore only individually selectable files after mounting the VHD-Backup image to a drive letter.

I tested and especially like the Windows XP Mode, which You can download seperately for free: http://alternativeto.net/desktop/windows-xp-mode-and-windows-virtual-pc/ .
But unfortunately it works only with the expensive editions Windows 7 Professional and Windows 7 Ultimate, not with Windows 7 Home Premium, see http://www.microsoft.com/windows/windows-7/compare/default.aspx . Windows 7 is clearly much better and faster than Vista.