I've done some research and it appears that Windows 7 is about tied with Windows XP users as far as current popularity (Vista seems to be a flop).

My MSDN subscription includes access to multiple builds of various operating systems for "free" for development purposes. If my project is developed, tested and built on Windows 7, assuming that VS is installed on Windows 7 and the entire project is developed in Windows 7, would that, for any reason, exclude Vista, XP (and for fun) 98 users? I know that most software can be run on newer versions of OS, but older, not usually...

I've not played with setup projects much (ok not at all), but should I be worried that I might be excluding certain OS from running my application simply because of the one I'm developing on?

It should run as long as you don't exclude them (use x86 or any CPU, not x64) and the .NET framework that you are using is available for that OS.

Do you happen to know what OS .Net 4 is available on?