Easy Question - Upgrading from XP 32 to 7 64

I have a PC that I plan on upgrading in the near future, namely, before Christmas. Here it is:

OS Version: Windows XP 32
Processor: AMD Athlon 64 X2 @ 2.02GHz
RAM: 2GB
Graphics Card: NVIDIA GeForce 8600 GT
Motherboard: Gigabyte MA780G-UD3H
Power supply: NZXT 500w

Plan on starting with Windows 7 and RAM, then moving on to CPU and then GPU soon after.

I've never upgraded or purchased a before, and I'm sure this question is pretty elementary to you guys - but all I know is that I'm fine with Home Prof 64, but I'm confused over which exact one I buy. I see full retail, OEM, and upgrade versions, but I'm not sure what the differences are, and which is right for me.

Any input would be appreciated.