Move your files from the C drive to any other partition and install Win 7 64bit using a bootable DVD. You will have to reinstall games and applications anyways. USMT tool i guess can only be used if you are trying to move matter from 32bit --> 32bit OS as in 64bit there are 2 program files folders viz. Program Files and Program files x86.
Only C drive needs to be formatted for optimal/clean installation.
And you cannot upgrade from 32bit to 64bit from any OS, not only Win 7.