XP upgrade is nice. If you do so keep in mind that almost any computer older than 3 years will suffer speed reduction. I recommend at least 1Ghz CPU, although I have 800 Mhz and it works fine. 256 memory is a must. video card of at least 16mb, 32 is better (it will work on 8 megs card but graphics would be crappy). Default installation takes about 2gigs of hard disk space. You must tweak the OS after installation to remove unnessesary services and programs to save space and memory (thus improve speed and reliability). If you want compact but robust system I recommend going with Windows 2000, although older, it performance almost the same as XP if you don't care about pretty graphics. As said earlier clean installation is almost always preferable. Thus you will loose you programs and if you don't back it up - the data. After that you must install updates from windows website to insure that you system is secure and performance is good. That takes a lot of time unless you have a high speed internet. XP has a lot of great functions and features but you really have to know your way around it, especially if you have an old hardware. Some features like "regular user" and "admin" login might also be confusing especially they might cause problems with programs not designed for multiuser environment. Most of these problems are solved by logging in as admin, but new probmes arise as a result. If you have old printer, scanner, and etc you might need a new drivers (i.e. special file or program) so XP can recognize it. But in this sence XP is better loaded with drivers compared to Win 2000.
Sorry for such a short post. I guess you'd better off using what you have now and not waste you time, money, frustration, and etc. for an old comp.
Regards,