The Vista Upgrade Advisor will look at your hardware and also help you identify which edition of Windows Vista will run smoothly on your PC.
Now here's an interesting case when Vista Advisor can go wrong.
Recently one of our MVP friends ran the Windows Vista Upgrade Advisor on a brand new Windows XP Home machine with Intel Core 2 Duo processor, 1 GB RAM and 256 MB NVidia GPU. His PC configuration would easily satisfy the requirements of Windows Vista Ultimate with Aero Glass or Flip 3D effects but the Upgrade Advisor software suggested him upgrading to just Windows Vista Home Basic which is like the most basic version of Windows Vista.
This low upgrade score was well explained by Pandurang - "The upgrade advisor queries the hardware similar to the way Vista queries it during installation. During installation, the system usually cannot detect the NVidia CPU, your display capabilities, etc. because the drivers are not installed yet. Vista can only check with the drivers that ship with it, pretty logical huh?"
So if you have a fairly fast machine but Vista Advisor is suggesting otherwise, don't listen and upgrade to Vista Ultimate edition right away and it would run just perfect.
Pandurang suggests upgrading your device drives after installing Vista - "Especially important if you need a new driver for your Internet connection - coz you may install Vista and then realize you can't connect to the Internet to download :)"
Don't always believe the Windows Vista Upgrade Advisor reports.