Buying Windows 7

I have parallels 4 and am upgrading to run windows 7. I want to buy Home Premium and whenever i inspect it closer on a website it always says, "for upgrade from Vista." Now this is for copies that all cost the same so it confuses me. Am I just being and idiot? Also I am getting this because my engineering class is using a program that requires windows. Also if I should get business, or Ultimate please let me know. (I am in Highschool so I can't get college discount, also I am upgrading from parallels 4 to 6. Would I need to by 5 as well? And I also want to run Fallout 3 in this, I had a trial copy of Windows in boot camp and Fallout 3 worked fine, someone on the parallels website said that they got it to work on parallels 5 just fine. I however recall the VM cutting your RAM in half and the person on the website had 8GB, I have 4GB.) Any help would be appreciated.

There are different versions of windows: Full (or Retail) and Upgrade versions.
For the upgrade versions you need to have a previous version of windows installed to upgrade it to Windows 7. For full versions, you do can do clean installs and do not need to have a previous version of Windows.
You do not say which website you visited. So assuming, you are looking at Microsoft's store at Microsoft Windows 7 - Download, Buy and Upgrade at Microsoft Store. you can get full windows 7 pro for £219.99 or Ultimate for £229.99.
To save money, you can go to places like Amazon and save a fortune and get
Windows 7 Pro for £158 or Ultimate for £158.

I do not think running games in a VM such Parrallels is a good idea, there is no guarantee it will work at all as you need full 3D access to play games. Use Bootcamp instead.