Vista Shadow Copies — Helpful to Users, Even More to EDD Recovery? reports that even when you overwrite files in Vista they're not really gone. In one sense, this fixes a big glitch in XP and its predecessors: if you saved a new version of a file over an old one, the old one did not go to the 'trash' folder to hang around for recovery. It was gone, or at least gone enough that it would take a lot of luck and high-class computer forensics to recover. Now, “Shadow Copy” prevents this:
Have you ever accidentally saved over a file you were working on? Accidental file deletion or modification is a common cause of data loss. Windows Vista includes a useful innovation to help you protect your data: Shadow Copy. Available in the Ultimate, Business, and Enterprise editions of Windows Vista, this feature automatically creates point-in-time copies of files as you work, so you can quickly and easily retrieve versions of a document you may have accidentally deleted. Shadow copy is automatically turned on in Windows Vista and creates copies on a scheduled basis of files that have changed […] It works on single files as well as whole folders.
So this feature is great for emergency recovery. And of course for discovery in lawsuits too.