I totally agree with myminpins. I agree more should you decide to use what is already installed in your laptop (Vista).
That and some $$$ for hardware could really help improve performance. Hardware upgrades like maxing out RAM (ex. 1GB to 2GB or whatever the mobo allows)... replacing HDD to a faster speed one (ex. 5400rpm to 7200 rpm or higher). I think you would spend the same doing these upgrades and getting XP.
If you want to conserve HDD space, do cleanup constantly. I use
CCleaner.
If I were in that situation I would:
1. Uninstall stuff that I do not need.
2. Tweak as per myminpins
3. Upgrade RAM
4. Run CCleaner at least once a day.
I hope that helps