My current OS is Vista Home Premium, and I am not disappointed. I heard really bad things about it, but I've been using it for a while and honestly, it doesn't have many backwards-compatibility issues(with only a few programs I have used), and the layout and new features are much cleaner and nicer than XP. According to my experience, Lunar Magic is fully functional with Windows Vista. Of course, It's totally up to you whether you should upgrade or not; do some research, I don't want to completely one-side your opinion...
Oh, and UAC (User Access Control), that annoying protection program that asks you if it is allowed to perform certain functions, can be disabled. As you can imagine, this is for security measures, and just a few extra clicks to protect your computer is worth it.
