Office XP is an alternative name for Office 2002. The difference is that
Office 2003 is the most recent version, and Office XP is older.
Both Office XP and Office 2003 require activation. So, if that's an issue
for you, Office 2003 isn't different with that respect.
Aside from that, Office 2003 dumps PhotoEditor in favor of the Office
Picture Manager. The latter is better at managing, worse at editing. Outlook
2003, I think, is much more stable than Office 2002, and is improved in a
number of respects. But, there are interface changes that some people don't
like. Other applications have evolved a bit, but not in really major ways
(IMO).