I setup Eclipse in
c:\software\eclipse_{version}\
I keep all my open source packages (ANT, Maven, Apache, etc) in c:\software as well. Then I add the necessary directories to my $PATH variable (c:\software\ant\bin).
I also keep the Eclipse workspace under c:\software\eclipse_workspace.
The big plus behind this setup is portability. I can simply move the entire folder to a new drive, re-setup my path, and boom everything works. No interference from registry settings at all. Makes it very easy to backup.
This approached worked for XP, Windows7 RC1 and Windows7 Professional without issue.