What version of XP you are running whether or not you got the dual core hot fix and which service pack you have. Its not like Hyperthreading where the task manager looks at it as two separate cores, but if your XP doesn't recognize that you have dual core, you'll experience a huge performance drop.
I'd recommend XP Professional, and try to get SP2 since its the version that Microsoft is currently supporting. Also, after installing the OS get this: http://support.microsoft.com/kb/896256
You can tell what version of Windows you have by looking at the disk, or the provided booklet
next question.... since the Core 2 Duos support 64bit, should I get a copy of 64bit xp pro? This is for a computer that will be used mostly for gaming.
In my experience X64 does run a little faster but you have to check compatibility of the games you play. The major titles like Q4, D3 Splinter Cell, FEAR, Oblivion play well but others don't.
Planetx64.com has a good list of supported titles. I'm about to reinstall X64 on my 4400+ as more IE plugins are supported now. That was truthfully the reason I went back to XP. Now that MS is really pushing X64 it should be much better when Vista drops.