If you are just wanting the data, not the programs, use the "File and Settings Transfer Wizard" that comes with XP. I could type it out, but I'm lazy, so go
here for an explanation on using it. When you're done, your desktop will look the same as it did on your old computer - all you do is install the applications afterwards.
It'll copy all your information from your old computer onto storage, then you copy it back to your new computer. Depending on how much data you have, just use a USB key, or external USB hard drive to copy to (if you don't have one, get one, they are cheap now and you can use it for backup after, or just to store more files on).
I always use the wizard from the XP install cd, that way you don't have different versions of the wizard that don't work together.
Putting your old drive into your new machine will work, but you need all the drivers for your new hardware, and then you keep all the cruft you've accumulated over time. Plus newer hard drives are faster and much bigger, so it usually makes more sense just to take the data, and start the rest over.