Now that virtualizers are here, let's default to letting you run your old system
Virtualizer technology, that lets you create a virtual machine in which to run another "guest" operating system on top of your own, seems to have arrived. It's common for servers (for security) and for testing, as well as things like running Windows on linux or a Mac. There are several good free ones. One, kvm, is built into the lastest Linux kernel (2.6.20). Microsoft offers their own.
I propose that when an OS distribution does a major upgrade, it encapsulate your old environment as much as possible in a compressed virtualizer disk image. Then it should allow you to bring up your old environment on demand in a virtual machine. This way you can be confident that you can always get back to programs and files from your old machine -- in effect, you are keeping it around, virtualized. If things break, you can see how they broke. In an emergency, you can go back and do things within your old machine. It can also allow you to migrate functions from your old machine to your new one more gradually. Virtual machines can have their own IP address (or even have the original one. While they can't access all the hardware they can do quite a bit.
Of course this takes lots of disk space, but disk space is cheap, and the core of an OS (ie. not including personal user files like photo archives and videos) is usually only a few gigabytes -- peanuts by today's standards. There is a risk here, that if you run the old system and give it access to those personal files (for example run your photo organizer) you could do some damage. OSs don't get do a great division between "your" files for OS and program config and "your" large data repositories. One could imagine an overlay filesystem which can only read the real files, and puts any writes into an overlay only seen by the virtual mount.
One can also do it the other way -- run the new OS in the virtual machine until you have it tested and working, and then "flip the switch" to make the new OS be native and the old OS be virtual at the next boot. However, that means the new OS won't get native hardware access, which you usually want when installing and configuring an OS upgrade or update.
All this would be particuarly handing if doing an "upgrade" that moves from, say, Fedora to Ubuntu, or more extreme, Windows to Linux. In such cases it is common to just leave the old hard disk partition alone and make a new one, but one must dual boot. Having the automatic ability to virtualize the old OS would be very handy for doing the transition. Microsoft could do the same trick for upgrades from old versions to Vista.
Of course, one must be careful the two machines don't look too alike. They must not use the same MAC address or IP if they run internet services. They must, temporarily at least, have a different hostname. And they must not make incompatible changes, as I noted, to the same files if they're going to share any.
Since hard disks keep getting bigger with every upgrade, it's not out of the question that you might not keep your entire machine history behind as a series of virtual machine images. You could imagine going back to the computer environment you had 20 years ago, on demand, just for fun, or to recover old data formats -- you name it. With disks growing as they are, we should not throw anything away, even entire computer environments.