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Early performance tests of the latest build of Windows 7 have shown it's significantly faster than Vista and XP (and still outperforms both with 1 GB of RAM):

http://blogs.zdnet.com/hardware/?p=3236&page=2

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Would you recommend, at this point, installing it on a computer that currently runs Vista dog-slow, instead of backpedaling to XP?

No, its a beta with a designed "time out" period. If you want Vista without the visual glam, look for a torrent of Windows Small Business Server 2008 (its Vista based) and google for "Windows 2008 Workstation Tweak" -- its a program that'll knock off most of the server components and free up like 1.5GBs of HD space.

It should leave you with a thin, responsive, vista-based OS that looks a lot like Win XP/2K with some Vista influence.

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