I find Windows 7 to be better for old games than XP. Call me crazy.
An example is this: Rollercoaster Tycoon 1 won't run properly on XP, but runs fine on Windows 7. Even in 64bit.
Not as good as Windows 98, however. I'm still waiting for DOSBox to properly emulate a Windows 98 environment, because no one else would do it.
XP isn't as good as 98 either. This is due to XP onwards using the NT kernel and thus cutting ties with DOS for the most part. Windows ME, 98, 95 etc. worked so well because they were basically shells over a DOS environment.
It's very difficult to get certain old Windows games to run on any NT-based OS due to this lack of DOS integration. DOSBox won't work too well because it's aimed at DOS games and was never built for emulating Windows.
The only really good options for running old Windows games properly is Virtualbox/VMware.