I never used Vista.

If you get a PC with Vista pre-installed though, apparently you can get a coupon to downgrade to XP for free, so use it as a trial to see if you like Vista at all. If you don't, downgrade.

Hardware:

I heard if you get it pre-installed it's a lot less hassle because you already have MS approved drivers and Vista compatible hardware. If you don't, it's a pain because you have to get new drivers for Vista otherwise secure DRM paths are disabled and that causes downsampling or inability to play certain media. Or your drivers may just not be supported or work at all if your hardware manufacturer doesn't support that piece of hardware anymore or went out of business. I imagine if you get a 64-bit Vista machine it's the best idea because your hardware will be guaranteed to be supported, because if you plan on switching to 64-bit later, there is even less hardware supported on that.

Software:

I'm not sure if it's worth it for DirectX 10 because consoles are the primary development target these days, and you may find it easy to live without DX10 games, or PC games altogether.

The 64-bit version of Vista doesn't have 16-bit compatibility. DOS apps won't run at all, but there's always DOSbox.

App compatibility should probably be better now although if you use some old apps, they may break. When I used Windows I used to have a folder full of applications I would just copy over and use right away without installing (archive utilities, image viewers, cd/dvd rip/burn, image mounting utility, better sound recording software, winamp, etc) and they would just work. Some of those apps were from the 16-bit era, some from the Win95 era, some from the 98 era, some from Win2000, etc. Who knows if it would work on Vista. Try and consider what software you rely on and see if it has a Vista version.

Even then, try and consider what functionality you need from Vista. There's not a lot you can do with Vista that you can't already do with XP. A lot of 3rd party freeware are a lot better and more functional than the default Windows apps which are usually replaced anyway.

But if you're getting it for free, what's the difference? However, the next Windows version is only 2 years away and it might be better to wait until then to get a more refined OS and companion software, and stick with XP now instead of having to fiddle around with new stuff to get it the way you like.

Security:

A lot of people say you have to disable the important security features to get annoyances out of the way, which kind of defeats the purpose of the new security features. Vista is supposed to have a better firewall. Vista has new code which has yet to be tested, but XP is more targeted. Both require you to install additional software to secure it, but Vista probably has more control over what security software should do so maybe it behaves better with it. On the other hand that might only help you if you insist on running stuff like Norton or McAfee. I never had problems using AVG on Windows.

If I were forced to choose I would probably stick with what I have because I don't really want to beta test software. The new version of any OS is filled with annoyances for day to day tasks. If you like fiddling with stuff then it's probably actually interesting for you, but if you're leaving your computer on to download shit overnight, or you're doing a lot of heavy browsing or IMing, or you're hosting something or need to be always connected to something, and you don't want shit to close on you or screw you over somehow then it's not worth it. With Ubuntu I am just using long term releases and I only update 4 months after it's out unless there is a really compelling reason to update (I wanted to try out gl desktop). With Windows I never moved off of Windows 2000, and if I had to use Windows now and couldn't get something done with 2000, I would go with XP SP3.

Just curious, any reason not to use Windows 2000 nowadays?