It doesnt take up that much space. Read what Hikari said.
Win7 COPIES the files to the hard drive and does the install FROM the hard drive. then it does the configuration and everything else and then REMOVES the temp files that were in use for the install. At the end of it Win7 on a bare install will take up roughly 5GB or so.
It needs teh extra space so that
1. It can copy the files from the DVD to the hard drive
2. decompress the files for install
3. allow for updates and other items to be downloaded and installed
4. allow for room for the pagefile, temp files and cache.
This is the same thing that Vista did. Yet no one said a word about why it needed 20GB.