Buy new or upgrade XP machine
I also have a 6 - 8 year old machine running XP. I replaced it as my primary PC with a Quad Processor and Windows 7 system. I purchased this without a monitor. I am well pleased with this and glad that I did. The old machine was used my daughter who was attending Community College because of their technology being behind.
My son chose to upgrade his newer Desktop to Windows 7. He had some hardware problems with disk drives. After the Windows 7 upgrade he installed one of the old disk drives, booted the system and voila: Win 7 recovered the hard drive. He installed the other drive that had failed, rebooted system and again Windows 7 recovered the hard drive.
I think there is a fine line on what decision to make. I'm glad I purchased new, He is glad he upgraded to WIN7.