From Paul Thurrott:
As with Windows XP today, there will be home and business versions of Vista, plus a weird pseudo-Vista called Windows Starter 2007 that will replace XP Starter Edition and won't include any of Vista's graphical improvements. On the home side, we'll see Vista Home Basic (and Home Basic N for the European Union--EU--version), Vista Home Premium, and Vista Ultimate. Vista Home Basic (note the lack of the word Edition anywhere in the titles) is a replacement for XP Home Edition, whereas Vista Home Premium will replace XP Media Center Edition (XP MCE). I'll get to Vista Ultimate in a moment.
On the business side, Microsoft is planning a Vista Business (and Business N for the EU) version that will replace XP Professional Edition, a new Vista Enterprise that will provide a single instance version of Microsoft Virtual PC and other unique features, and, probably, a Vista Small Business version, also new, that will be the client equivalent of Microsoft Small Business Server (SBS). I say probably, because Vista Small Business is the one product edition that didn't appear on Microsoft's site temporarily.
On the top of the heap is the new Vista Ultimate, which is of course the version everyone will want. This version will include all the features from both the home and business sides of the fence. And unlike the various XP versions today, each Vista version should be a true superset of the others as you move up the product line. So Vista Home Premium is a superset of Vista Home, and Vista Enterprise is a superset of Vista Business.