Using the installation DVD is far better than the "repair disk". It has been shown to have some issues with it.
Now not all users will experience problems, but a lot do.
If you want to create a repair disk here are the steps to do it:
I would suggest you to create the system image in C drive itself and try to create a startup disk. You may follow the steps mentioned below to Create System Repair Disk in Windows 7.
Step 1: Press the Start button on your keyboard (the one that bears the Microsoft logo) or click the Start button from the bottom left hand corner of the screen.
Step 2: In the search box type in System Repair.
Step 3: Select Create a System Repair disk
Step 4: Take a blank DVD and put in the burning drive (DVD writer). You could also use a CD, just make sure it is large enough to store the System Repair Disc.
Step 5: Select the burning drive from the drop down menu.
Step 6: Click Create disc. Wait for the burn process to complete.
Here is how you can replace steps 1, 2 and 3 in the tutorial presented above: Start -> All Programs -> Maintenance -> Create a System Repair Disc.
If you have a Windows 7 DVD you can use that to boot to the Windows Recovery Environment. If you bought a PC with Windows 7 preinstalled (OEM license) then you do not have a DVD. Use System Repair Disc to create a system image -> use the disc when something goes wrong and you cannot boot Windows 7.
Be careful where you store the System Repair Disc. Keep it somewhere safe, but not so safe that you forget where you put it.
For more information on creating system repair disk in Windows 7, refer to the link below:
http://windows.microsoft.com/en-us/windows7/Create-a-system-repair-disc