Question: I'm finally ready to drop Windows XP and move to Windows 7. Should I go with the 32-bit or 64-bit version of the operating system?

Short answer: 64-bit.

Long answer: 64-bit, but you may not see much real difference. Before explaining why, there is an important contraindication to be aware of: if you use any 16-bit Windows applications or DOS applications, you'll have to either stick with 32-bit Windows, or run those applications in a virtual machine (or, for DOS programs, an environment such as DOSBox). 64-bit Windows supports 64-bit and 32-bit applications, but 16-bit ones are consigned to the trash can of history.

In practice, the only advantage of using 64-bit Windows is that you can install more physical memory. 32-bit versions of desktop Windows are limited to 4GiB of physical memory, and thanks to dubious compatibility restrictions, they can't even offer that much. Every byte of memory in a system has a physical address, a number representing that byte of memory, and on 32-bit desktop Windows, those addresses are only 32 bits long (or rather, the addresses are between 36 and 64 bits long depending on which bit of software is manipulating them, but only 32 bits are actually used by Windows). This should allow 2³² addresses, and hence 2³² bytes—4GiB—of memory.

If you are upgrading or buying a new system with Windows then you should always opt for the 64-bit version. Most manufacturers are not even shipping new systems with 32-bit anymore. Read the article for more info as to why