Back in July, we announced that that IE 7 for Windows XP will be pushed out using Windows update. Since IE7 is bound up with Windows Vista, the release of IE7 for XP will happen at about the same time as Vista releases to manufacturing. A few weeks after that it will be pushed out via Windows Update.
If you manage a large number of PCs, then you should be using Windows Server Update Services to manage updates and you can decide whether or not client PCs get the update. However if your PCs connect to Windows update directly, you should check to see if IE7 works correctly for any applications which are critical to you, and if not consider getting the IE7 update blocker
More information is available on the IE team blog
This post originally appeared on my technet blog.