Devastator_uk :
Vista supports 16-bit the same way as XP does so it's not likely to be a Vista specific issue, I'm sure the problem is you wanted to run them on Vista 64bit which wont work.
XP/Vista 32bit can run 16/32 bit apps.
XP/Vista 64bit can run 32/64 bit apps.
Having said that it is possble that some older apps don't work correctly with Vista for other reasons.
Also if you have a few 16bit apps I would probably consider having Vista 64 as primary/host and 32bit in a virtual machine.
This is incorrect - 16 bit functionality was removed and never put into place for Vista. It is, and was, never able to do that natively. You *can* run 16 bit programs on a Vista machine, you just need to use a Virtual Machine to do it.
For the OP - If you are sticking to your current config, I see little reason not to stick with XP for the time being and go with Win 7 at the end of the year. Or maybe torrent the Win 7 Beta now to play with, if you like. This is the "Do Nothing" approach to problem solving. You won't be able to use all the memory due to address space limitations, but that's a relatively minor issue since it has little/no impact on how the machine actually runs.
If you want to use Vista
(and FWIW, I am quite happy with my Vista machine), then I recommend skipping the 32 bit version entirely: After all, you already have XP installed, therefore you may as well skip straight to 64. In actual operation, you will find very little difference between the 32 bit and 64 bit versions: 64 bit will have two versions of Internet Exploder, two Program folders
(regular and one for x86), and it's a little more touchy about drivers being 'signed'. In return, you get essentially unlimited space for whatever hardware you care to add, and in my experience Vista x64 is more Robust than the x86 version.
If you are planning on adding more RAM or going SLI/Crossfire or whatever: Then the more you add, the stronger my recommendation becomes to go with either Vista or Win 7 x 64 as your main OS. You can Dual Boot XP 32 for when you want/need to use your 16 bit proggys, or use a VM to do it. Just understand that VM's generally don't allow hardware accelerated graphics, which shouldn't be much of an issue for modern hardware anyhow.