If you dislike the new Favorite Links panel in the Windows Vista Explorer panel, you might not realize that it’s really called the Navigation Pane, and it’s extremely simple to turn off.
If you want to disable the entire panel, just click the Organize button, and select Layout, and then deselect Navigation Pane.
And just like that, no more Favorite Links bar. The only problem with this is that it also hides the Folders view as well. (read further)
If you want to show the folders view instead of the favorite links panel, just hold your mouse over the top of the folders bar until it changes to a resize icon like this:
Then just drag it all the way up to the top, and you will only see the Folders view from now on.
Thanks to everybody in the comments for leaving comments about this.