I'm not sure if this makes a difference but I'm a gamer so I like to have everything running milky smooth. I went from XP Pro SP2 to Vista Ultimate SP1 recently. I love it since the SP1 really did something on improving speed. Does it make a difference at all if I upgrade or is it best to format and install? If so, why is it better?
If possible, it is always better to have a fresh install versus an upgrade. You generally end with a better Windows. A lot of junk will not be there. A clean install is the best.
The best thing is to buy a newer HD, unplug the old one, install new one, and install Windows plus updates. Once done, you cam replug your old HD and transfer your data. After a while, you can use it as a backup or you keep it as a dual boot in case you need XP!