Microsoft has announced an update to the FAT32 file system, the "exFAT" or Extended File Allocation Table system. It allows drives larger than 32GB to be formatted in Windows XP and doesn't have the 4GB maximum file size of FAT32. Full details HERE

Strange they should be releasing this for a system they claim to be past its sell-by date.

I suspect it it intended for use with large external drives and (future) mobile devices where large amounts of storage are required, but for which NTFS is unsuitable.

Also interesting is that Microsoft got things badly wrong with Vista and the ridiculously highly specified hardware that is necessary to run it. The fastest growing sector of the computer market in 2008 was the "Netbook" which couldn't possibly run Vista and which started out running versions of Linux. In order not to "miss the boat" entirely, Microsoft had to allow XP (possibly a cut-down version?) to be used in some Netbooks. I read recently that Windows 7 will remove a lot of the "bloat" of Vista so that it can run on much lower spec hardware.

On the same page was link to an article about XP deliveries for OEM extended to May 2009.