If you want to develop apps which run on both Windows Vista and Windows 7 you should use 5.3. Templates *should* work for both VS 2005 and 2008.
If you want to develop apps for Windows 7 you should use 6.0. Templates are only available for VS 2008. Development should occur on Windows Vista with testing on Windows Vista and Windows 7.
Generally speaking you should install 5.3 prior to 6.0 on a Windows 7 machine -- but should not your mileage may vary -- we never did a ton of testing for this scenario.
Charlie Owen (Microsoft)