Heartened by Ireland's performances in 2006 which saw them garner a Triple Crown and notable wins over South Africa and Australia, O'Connell said: "Our last Six Nations campaign was a huge step forward for us and we will be aiming to maintain that progress and momentum when the tournament begins.
"In terms of the results and the way we played, 2006 was very pleasing - we played clever rugby. But we can't get too far ahead of ourselves. We're very aware that this a World Cup year but the tournament is in September and there are a lot of games have to be played before then.
"Our minds must be focused on the Millennium Stadium and on Wales. It's a daunting challenge because the big names that celebrated their Grand Slam success (in 2005) are back in the squad, apart from Shane Williams.
"Wales have players back from injury, Italy are getting stronger, Scotland are improving and England and France are always going to be tough to beat.
"Six or eight years ago, France or England would have been the dominant forces but we can't say that now."
O'Connell, who has had the added responsibility of being Munster captain this season, has been delighted with the development of some Ireland's more inexperienced squad members, particuarly those from north of the border.
Over the past year, the amount of Ulster players making the Irish squad has steadily grown and they may just hold the key to Ireland ending their 22-year wait for a championship title.
"It was great to see the newer guys coming in and doing so well during the summer tour and the autumn internationals," said the 27-year-old lock.
"I worked with Rory Best a lot during the autumn and he is a very tidy scrummager and hooker. Neil (Best) is the same as his game enjoyed a massive lift during the autumn, he has a great attitude and is a really tough tackler.
"The Ulster players coming through has reflected the success they've had in the Magners League. Paddy Wallace, of course, was the man of the match against the Pacific Islanders.
"Andrew (Trimble) is a very nice lad, a very powerful, raw runner who is hard to take down - we saw that against South Africa with his fabulous try and hand-off. Tommy Bowe is another huge talent."
A Triple Crown and Heineken Cup winner last year, O'Connell knows Ireland could be on the verge of something special in 2007.
"The Six Nations is a massive competition which everyone is desperate to do well in. If we can keep playing well as a unit it will leave us in a healthy position going into the World Cup but it's a competition which brings its own rewards and glory," added the IRB Player of the Year nominee.