The choice is really only one you can make. I'd say if you are planning on replacing the PC in the near future (like others in the office), waiting may be the way to go. If you are planning on holding on to the computer, upgrading is the way to go. Before upgrading it is a good idea to run the Upgrade Advisor to be sure the computer is equipped to run Windows 7.
In my honest opinion a 1.8GHZ processor wouldn't make the cut. The 2 gigs of ram however, would. I'm also assuming the GPU is older than sin so the driver support is probably non existent for Windows 7. I would stick with XP if has been tested and proven to work with the hardware that you have.