Update that will allow you to install Exchange 2007 SP1 into a Single-label named domains is now available
The msexchangeteam blogged how the single-label domain will be able to apply Exchange Server 2007 SP1. There was a change in the prerequisite check file.
Localized versions of this file will be available soon, and we'll update this blog post when they are available. Do not use the English version of the file if you are running a non-English version of Exchange 2007.
Read more at source: http://msexchangeteam.com/archive/2008/03/26/448511.aspx