I ran Windows 7 32bit for a short while on a AMD Sempron 2800+ 2GHZ with 1.25gb of ram and a Ati 9600 Pro graphics card,And to my amazement it was actually quite snappy,So yeah to the OP i think it would run it fine,But unless your wanting some feature windows 7 has that Xp does not then i dont really see the point,If you already had a copy then yes definatly but if you have got to go out and buy it i would wait until your next major upgrade.
Theres still a lot of windows Xp users out there....good OS,Only real reason i ever upgraded to 7 i because i wanted DX10/DX11 features.