Death of Windows XP SP3

Relax, you don't need automatic updates. XP runs better with the automatic updates turned off. As long as you have a high quality antivirus maintained there is very little danger. As long as you are not using microsoft outlook for mail, which is a target for attacks. Use Yahoo or G mail instead, the security is built in. Updates have caused a lot of problems in a lot of computers. It's SP 2 that will no longer be getting support. I would hold on to XP SP3 as long as possible. I would rather use 2000 professional also.
Windows update addresses a lot of security problems, but a good security software program works much better than any update that microsoft has provided. I have had zero problems with updates turned off permanently.
Indecently, windows vista is a nightmare. I would wait another 1-2 years, till the bugs have been solved in windows 7, before upgrading an operating system.

Nothing wrong with either Vista or 7. As far as XP, it is in the "extended supprort phase" until 2014. That means critical updates will continue to be issued until that date. You will of course need to upgrade to SP3, but that should be mostly a non-issue.

Windows updates are more than just security... they are also for stability and compatibility. The Sasser worm would have been much less of an issue if people had simply kept up with their updates... the vulnerability that Sasser exploited was patched months before the worm hit; yet people had not been keeping up with them. If you are connecting to the internet, you need to keep your software as up-to-date as possible.

I recommend that you get one Windows 7 machine for testing in your environment. While I have no issue with Vista, Win 7 Pro does have one feature you might find useful: XP Mode. It wouldn't hurt to get a jump on the new OS and learn how it can be integrated into your environment... that way when support does stop for XP, you'll be ready.

For XP compatibility mode, you don't HAVE to have the pro version and above. Here is an article on how to do it in the basic version.  
http://www.tomshardware.com/news/windows-xp-mode-window...

I think vista is the operating system from hell.  

Zoron is correct. Security updates for both XP home and pro will continue through 2014. Ironically, all vista versions except pro will lose support in 2012. XP should outlast most versions of Vista.

Pro versions go into the "extended support phase" after 5 years. I don't believe Home versions have and extended support phase... but since they are essentially identical with the exception of features available, updates for Pro would still work with other versions. MS supports their business-oriented OSes for up to 10 years before retiring them and no longer issuing updates. XP support was extended due to Vista being delayed.

XP home also receives extended support through 2014.

Yes, because it is essentially identical to XP Pro. The only difference between the two is that Home can't be joined to a domain; nor can it be a Remote Desktop host.

No that not why it receives extended support. All versions of Vista and 7 also share the same core similarities.

The reason is MS chose to offer the extended support phase to XP home is because of the HUGE install base. XP home as of april represents 50% of all OS installs. That means half of the computers on the internet would have been without security updates starting in 2 months. That would have been a disaster waiting to happen.