Microsoft acknowledges the use of Windows XP software, hardware and peripherals on Windows Vista since after all it is Windows XP users who are mostly moving to Windows Vista. The answer is yes. All the normal programs that work in Windows XP works in Windows Vista. But my answer should not be a total "yes". Since Vista is a new operating system, expect compatibility issues. As always there is the useful "compatibility mode" which you can turn on on any applications, choosing specific options such as running with Windows 98/ME or Windows XP SP2 compatibility mode. Do note that I've tested my software on Vista and found that 80% of them works the same, and there are some that won't work even with compatbility mode. I managed to get a few to work again after getting the update from the application main website.

If you run into any issues running in Vista, you should definitely check your applications for updates. It helped me a lot and it should work for you. However, remember that if the demand for a Vista compatibility for a particular software is low, don't expect a straightforward update or patch. The only way is to do some Googling and find a workaround.

In other words, most software work in Vista. Those that don't, compatibility mode should be used. If it still does not work, then check the software website for updates. If no updates are available, do some Googling. If none turn up, and you still want to use the software, there is just one solution -- return to Windows XP.
To me, Vista is great and works fantastically well.