<< XP might be pretty, but it's bloated and slow. Check out Anandtech's tests. Coupled with Office XP you can expect a 30-37% performance hit compared to win2k and office2k >>
So? Are you going to keep running NT or the semi-stable 9x? There is nothing you can do about the size of the OS or its performance. Win 9x was MUCH slower and MUCH bigger than 3.11 but offered real multitasking, stability, and beauty 🙂
One of the reasons Win XP is so huge is that it comes with thousands of drivers, and they take up a lot of space. I was able to install all of my hardware without having to manually install a single driver, which is awesome. Also, bitmaps for all those pretty interfaces (which I turned off) take up some space. Are you looking at the size of the directory where Windows is installed, remember that all the Cab files got copied there too.
Besides, Anandtech tested the Beta 2 and not the final version (not even the RC1!)