Software compatibility

it will run on XP. That isn't always the case with 3rd party software but with Microsoft Software it is a safe bet.

Also, I recommend NOT doing the upgrade of XP. Install a clean installation and then re-install all your applications.

To upgrade toward XP in a corporate network environment, I don't really find this very smart, especially if you already have W2K Pro. Beside the hardware needs involved - that you should also consider - from my experience as IT Admin, XP have a lot of problems with COREL when it was about printing to a network printer. Also, if you use AutoCAD (2000i or 2002), you have to dowload from the autocad site the patch that allows you to install the program. XP Pro and Microsoft XP, I don't know for what reason, sometimes (often though) stopped and pop-up that "Sorry for ... the program will be closed".
And if you intend to use AdobePhotoshop, think about upgrading all computers RAM memory at at least 512MB/1GB, because if you want to render some 10MB file, your computer will crash.
This is from my experience, of course, I did checked that on users: upgraded towards XP, but then, they asked me to downgrade because they had lot of problems, and it was XP with the pack and all updates.
And about hardware upgrade, you REALY should consider that in your budget.

you should run 98 under xp
95 under 98
w3.1 under 95
dos 4 under dos 5 under w3.1
dos 1 under dos 2 under dos 3 under dos 3.3 under dos 3.5 under dos 4