Do not install XP on less than 10 gigs. Here's why. Windows constantly requires updates, and some of them are large. Once you put service pack 3 in you are going have around six gigs right there. As a matter of fact, you could very well (depending on what you install) need 7.5 gigs or so to install SP3 because the installation routine has to archive and that takes tons of space.
Windows drives must be defraged from time to time also, and to do this correctly you need a certain amount of unused space on that drive. You will end up installing odd programs here and there that you cannont forsee at this time too.
If you want multiple comprehensive restore points, plan on that taking a few gigs too.
I already learned these lessons the hard way, by having to restore the whole drive (wiping out windows) and doing it all over again. This time I selected 15 gigs, and should be fine for a long time.