You should always do a fresh install on a newly formatted drive.
If you use any windows product, accept the responsibility that goes along with it: Accept the obvious...
that at anytime you may have to reformat and start over. Always have a plan for re-installing everything at anytime. This could be a big problem if you don't, because you never, never know when your Windows OS will crap out on you.
Anytime I hear the phrase--
I really don't want to start over, I have too many programs to reinstall
--I just grimace, because this operating system was meant to be reinstalled over and over. The only exceptions are servers (at least you hope so) and business Win2k machines, as, if people leave them alone after installing all base needed software, and only open files and save them...they are pretty reliable.
So, if you just want to install an OS once, and be happy, go for it, there must be someone still with 3.1 that is happy where they are....(do you get the picture?)
****Although to be nice, if you are happy with Win2k, just download a theme that makes it look like XP....won't be the same, but not worth upgrading at this time.