Though XP will officially be "dumped" next year, Windows releases don't tend to follow OS X releases in that they are generally still highly developer/community/user supported for years afterwards. I mean, just recently have some of the most popular programs begun to dump 98/2000. Considering how long of a retail lifespan it had and amount of market share it still retains, I wouldn't worry about being left out in the cold for a while yet to come.
That said, if you like to keep up with the latest and greatest; Windows 7 is quickly becoming the new standard for the cutting-edge and new feature software, and is certainly more future-proof.
I don't think your machine would have too difficult a time running 7, but XP is what it was designed for and will run best.