Your machine is more than adequate in the processor and memory area. Some of your peripherals and and other components might be different. As stated, check the hcl. Also check the manufacturers website. They sometimes will have known issues for upgrading to a new OS in thier knowledge bases.
I have found XP to be more stable than Windows 98, on the other hand, I have not noticed any stability improvements over 2000. What I have noticed, is greater compatability with older programs in XP. Some of the things that it can do is when a program calls for a specific version of one of the previous Microsoft OS's is fake the program into thinking that it has what it is looking for.
A couple of examples are, I have a children's game that thinks that it has to have a Dos kernal to run. In 2000, it would not work until I bought a third party tool to force it to run.
I also have an older EA sports Madden Football game that says it must have service pack 3 to run on NT.(It thinks that 2000 is NT, which it is, but much improved). XP just gives it the info that it needs and it runs.
It also does things like changing screen resolutions for you. Have you ever ran into a game or program that requests a specific screen resolution and/or color depth? XP will reset the depth when you launch the program and the set it back when you exit. This is the type of thing that it will do automatically, it also has some advanced settings for incompatable programs that the user can use to tune it.
It can be irratating what with it trying to get you to sign up for a passprt account, always trying to start MSN Messenger and sending those bug reports, but if you don't mind a little tweaking, you can disable those things.
Now for some of the downsides of XP.
It is new, so the breadth of knowledge on how to fix stuff in it is still a little low.
There are of course going to be some bugs found in it and some security problems, although people are still finding these things even in the older versions of Microsoft Operating Systems.
Some people state that you should wait until at least one service pack before installing a new OS. This was certainly true in NT and to an extent for 2000. Especially for a busness rollout. We are only doing a limited rollout of XP at work, one to address some compatability problems with some older software and the other is so the computer department can do more in depth observation of it.
At home, I am still running 2000, because everything I want to run, runs on 2000 and I have not taken the time to upgrade here yet. I like it and am planning on doing an upgrade at the house when I get the chance.