The only real reason to upgrade to windows 7 is for directx 10 and above. Other than that, Windows XP is a perfectly fine operating system. If games are not a problem, or you don't care about directx, its a no-brainer. It will always be faster and use less memory, though it isnt because windows 7 is bloated. Primarily they have a different memory management system. I'll stop talking there and save you from the boring details.
Seven all the way since it handles memory better plus many other things, but it does depend on your system specs. If your machine can't run Windows 7 then XP will obviously run faster :P
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