With 20 PCs, it'd certainly be wise to install a Windows Domain Controller/Server. It'd make computer management, security, backups and updates much easier. But XP can't do it. You need to install a Windows Server.
In all likelihood, Windows Small Business Server 2003 would be the best choice, since it's easier to properly install and manage than straight Windows Server 2003. And it has many tools for running a small business that don't come with standard Windows Server.
Microsoft: Top 10 Reasons to Use SBS 2003
Microsoft: Is your Business Ready for a Server?
Having a Server, especially SBS, will make many of your daily computer headaches go away and will greatly enhance your security and safety. But it's best implemented and maintained by somebody with proper training and experience, which most small businesses don't have. This applies no matter what Server you choose.
I don't know what country you are in, but in many, there are Microsoft-Certified consultants who specialize in planning and implementing servers in small businesses. Using one will doubtless save you time and money by helping you choose the correct hardware and software for your needs, by doing a quick and correct installation, and helping you take full advantage of your new server.