Today, Windows XP places your profile and application settings in the C:\Documents and Settings\%USERNAME%\Application Data folder, or more generally, the %APPDATA% folder which is inside %USERPROFILE%. Vista will be moving user profiles such that %USERPROFILE% points to:
%USERPROFILE% == "C:\users\%USERNAME%\profile"
or something like that. As long as the developer uses the logical names like %USERPROFILE% and %APPDATA% rather than the absolute path names for the installer and apps, you should be good.
Some of these changes are for security and disk backup reasons. By placing everything that needs daily backup (and similar security settings) in the same directory tree, backups and disk-volume segregation can be managed more easily.