The best "quick fix" in the short term may be to find an unused SD card (e.g. 1 to 4 GB, or larger) and turn on the
ReadyBoost feature. This lets Windows use the SD card as a cache, as even a slow SD card is much, much faster at random read operations than a spinning disk.
If you don't have an SD card handy, I'm sure there are plenty of people who have an unused one of that capacity lying around.
Is the Sony Vaio P series one of those small ultra-portable netbooks? There's a good chance that it uses 1.8-inch hard drives (most standard sized laptops use 9.5 mm high 2.5-inch drives) which can be a bit hard to source economically.
I wouldn't recommend spending much money on upgrades, considering that $500-$1000 will get you a much, much faster machine.
As for Windows 7 - most software that is being actively developed will work fine, as John says. The only catch is if you use any old hardware - e.g. my Canon 20D is no longer supported in Windows 7 (as in Canon won't release drivers for it), so I can't use it with BackyardEOS.