Windows 7 is the better (and more up to date OS). I've just set up a new MediaPortal using Win7 32bit and it has pretty much all worked out of the box.
But, you need to make sure you have drivers available for Win7, if you had slightly older hardware, that worked under XP SP3, there is no guarantee that Windows 7 has the drivers, nor that the original manufacturer supplies Win7 drivers. If you go for 64bit Win7 this is likely to be even worse. I've had to go for "generic" audio drivers as the motherboard manufacturer hasn't supplied Win7 drivers, and the audio isn't supported out of the box with Win7.