Windows disk space consumption has trended larger over time. While not desirable, the degree to which it's been allowed is due in large part to ever-increasing hard drive capacity, combined with a customer need and engineering focus that focused heavily on recover ability, data protection, increasing breadth of device support, and demand for innovative new features. However, the proliferation of Solid State Drives (SSDs) has challenged this trend, and is pushing Windows 7 to consider disk "footprint" in a much more thoughtful way and take that into account for Windows 7.
The disk "footprint" refers to the total amount of physical disk space used by Windows and with Windows 7 it's likely that the system footprint will be smaller than Windows Vista with the engineering efforts across the Windows 7 team which should allow for greater flexibility in system designs by PC manufacturers.
Ever wondered why the Windows SxS directory (%System Root%\winsxs) in your Vista is occupying more disk space? E7 blog has come up with an explanation about the Windows SXS directory and why it consumes huge disk space.
With all the hard work going into Windows 7 it should truly be a fit and finish release over what we saw with Windows Vista.