XP Pros:
-Fast boot time
-Better error logging and notification of critical errors. Under 2000, a video driver lock resulted in no good info. Under XP, upon reboot I get a detailed log of what happened (typicially it got stuck in an infinite loop)
-Start Panal. It's grown on me
-Hiding of inactive icons near the clock
-Skinable interface
-Driver rollback
-MSVDM, giving me 4 virtual desktops, all from an MS tool

Cons:
-I personally spend a bit of time after a reload getting rid of Luna, uninstalling Zip Folders, MSN Messenger and Explorer, and turning search back into 2000 mode.
-Media Player 8 is built in, but 6.4 can be brought back
-Time also has to be spent tweaking the file sharing
-Connecting to another machine and getting a password prompt can be painful. It enjoys filling in a random domain from somewhere

Personally, I wouldn't pay for the upgrade from 2000 to XP. But for free, sure. It took me a while to grow into it, but I figure one way or another, MS will force me to it. But Windows is becoming less and less important in my day to day life, and my transition to OS X should be complete next year, except for gaming.