satoru: And again you can't get rid of Office because Calc is horrible and Impress is... unimpressive. If you're JUST using Word then you can probably get away with OO/LIbre. If it's just for you, then OO/LIbre is fine. But the moment you have to interact with anyone else it's best to stick with what everyone else is actually using.
I'm in this situation as well. OO might be ok solution to me if I didn't need to send Word documents for editing to other people who are using Word as well (I make technical stuff (content) to the docs, and the documentation people then do the exact formatting etc.), and of course we rely on esoteric Word templated that I also have to use.
On the other hand, a bit earlier (before I got my Win7/Office2007 laptop) I had a major problem with my older XP/Office2003 laptop because I couldn't open their 2007 documents at all (I guess it was too much of a hassle for them to use the backwards compatible format). I was just about to install OpenOffice to that machine just in order to see their docs, but just got Office2007 (+Win7) in time.
If I was a student or an owner of a business, I might look into OO/Libre as a cheap solution. I guess that is why MS is handing out discounts or even free copies to students, just so that they don't try and get used to the options.
satoru: Yeah I agree here. I'd much rather throw Ubuntu 11 on an old laptop than XP. Good luck getting XP to run assuming you can find drivers for it and such. If you're going to go with an MS product throw Win7. There is literally ZERO reason to go with XP, unless you have some super esoteric software that runs off a serial card and an external parallel port dongle that ONLY runs in XP.
Games may be one reason (comparing 64bit Win7 to 32bit WinXP), but not much I guess, besides saving money of course (Win7 replacement costs money, well over 100€ here for upgrade version, close to 200€ for standalone retail).
My experience with drivers etc. for old hardware is a bit different from yours, though. At least it seems to me that for older HW the vendors are not offering Win7 drivers that much anymore (while XP drivers are readily available), so Win7 seems to be mostly geared to users of new HW.
Linux is a bit of opposite, ie. it takes time before drivers for spanking new HW appear, but on the other hand the newest Linux distributions seem to retain quite a vast support for older HW. So from the driver support point of view, IMHO Win7 seems to be a better option for owners of new HW, while Linux for older HW (for e.g. replacing the XP OS with a more modern OS).
That has been my way for quite awhile, ie. new PCs have the latest Windows OS, while older machines are turned into Linux machines (unless it is specifically for running older Windows games, in which case it may have XP, 2000 or even Win98SE). When I get my next laptop (maybe next year), I'm not necessarily in a hurry installing Linux on it, even on the side of Win7/Win8. Let's see again when Win7/8 are once again considered obsolete and insecure OSes, and everyone should make a jump to Win10.