Instead of upgrading your software and hardware to install Windows 7 here are some utilities which will allow you to feel working in Windows 7.
In order to make XP to look like Windows 7 you need to download ViGlance, Desk Topmost and Power Resizer.
ViGlance will bring the new functionality to the Windows XP Taskbar. You can see the sliding effects in Windows XP like Windows 7.
Download the ViGlance from the below link
To implement the Aero peek functionality in Windows XP downloads the Desk Topmost utility. Use Ctrl + Alt + D will give transparency to the opened window and will show you the Desktop on top of everything.
Download the Desk Topmost utility from the below link
Using Power Resizer a free open source utility for Windows XP to resize the window will automatically fit the Window to the empty space of the desktop screen.
Download the PowerResizer from the below link
Those tools will help you to feel Working in Windows 7 from your Windows XP system.