IEBlog informs that Internet Explorer will be distributed as a high-priority update via Automatic Updates "shortly after the final version is released for Windows XP, planned for the fourth quarter of this year". Internet Explorer 7 has Windows Genuine Advantage built-in so it won't install if the license of Windows XP is not valid (and sometimes even if it is). Although Microsoft will notify users about the new version of IE, most will probably just press "Install", so at the end of the year IE7's market share will be higher that IE6's share. This will be a problem for many companies whose sites will suddenly stop working: many webmasters don't test the sites in IE7 and the customers will upgrade from IE6 to IE7.
Microsoft will also release a IE7-blocker for corporate users that don't want to install the new version of IE. Most businesses will just sit and wait a couple of months to see if the new browsers has security problems or other major flaws.
I don't recommend to have Automatic Updates activated because Microsoft uses this feature to install all kinds of software, including the spyware Windows Genuine Advantage.
Related:
IE7 Beta 2 Standalone version (no installation needed, doesn't require WGA)
Update Windows from Firefox and Opera
What's new in IE7