Windows Vista™ Ultimate cannot be upgraded to Windows 7 Home Premium.

Windows Vista™ Ultimate cannot be upgraded to Windows 7 Home Premium. You can choose to install a new copy of Windows 7 Home Premium instead, but this is different from an upgrade, and does not keep your files, settings, and programs. You’ll need to reinstall any programs using the original installation discs or files. To save your files before installing Windows, back them up to an external location such as a CD, DVD, or external hard drive. To install a new copy of Windows 7 Home Premium, click the Back button in the upper left-hand corner, and select “Custom (advanced)”.

I just downloaded Windows 7 Home Premium but I get the above error message when I try to install. I have been nunable to do a Custom install to the disk partition which currently holds Windows Vista as this does not have enough space and will not allow me to extend it. I am no expert and I do not know where to go from here. Paid for Microsoft advice is not an option. I should mention that when I ran the Windows 7 Home Premium compatibility advisor it did not come up with any problems.