Sure you can use XP Upgrade Edition with Boot Camp. I wrote an article about it on my site awhile back, but the site's down for reconstruction. If I'm remembering right, you need 3 things:
1. Windows XP Upgrade disc & key
2. Previous version of Windows CD (ex. Windows 2000 Pro)
3. USB CD-ROM drive (or Firewire, can't remember if both work or not)
I also can't remember if I put the XP disc in the external or internal drive on the Mac. But it worked. If you don't have an external drive, just pick up a $30 DVD burner off Newegg and slap it into a USB/Firewire case. I think the one I have is from Bytecc. That's all there is to it. Cheaper than buying the full XP disc plus you get a nice external DVD burner! (I'd pick one up with LightScribe just for kicks, they're the same price)