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Although it may not be the most significant change that the Microsoft has done with respect to windows vista, but the company has surely changed the way that operating system handles the disk defragmentation. The developers at Microsoft, Rajeev Nagar and Matt Garson have written a lengthy article about the defragment process and how it differs between the three versions of windows.
Windows 7 shows progress while defragmenting disks unlike windows vista which didn’t show any progress while defragmenting disks. The defragmenting process can be terminated at any time without any adverse effect.

Windows 7 has the ability to defragment multiple volumes simultaneously and it automaticaly disables the defragmenting of the solid state disks as there is no need of defragmenting flash memory and continued write access could actually shorten its memory life. It supports the scheduling of the disk- defragmenting similar to Windows Vista which is by default scheduled at 1:00 AM.
Also, it can relocate even those files which can’t be relocated in windows vista.
Overall, the disk defragmenter is improved a lot but still it misses those eye-candy graphical views while defragmenting that it used to show in Windows XP.
If you want that “eye candy” plus more — like complete consolidation of free space and complete NTFS metadata defragmentation, then PerfectDisk 10 is an option — supports Windows 7.
Joe Abusamra
Raxco Software
http://www.perfectdisk.com
http://www.perfectdiskblog.com
The best defragmenter I’ve used on Win XP/Vista is Diskeeper 2009 Pro. No reason why it should be any different on Win 7.
Windows 7 Defragmenter also moves all files (whenever possible) to the outer edge of the hard disk. This is the fastest area of the disk and thus it improves the performance for reading/writing long files and booting the system. I checked it with UltimateDefrag.
@xbeza: that is cool