Buy an external hard drive large enough to hold everything and copy it all across. That's really the golden rule for reformatting, because I can guarantee you that otherwise you'll have the "oh god i saved that document on my desktop not in my work folder".
Before you reformat make sure you have installation CDs and cdkeys for your programs. The big ones are Windows/Office etc. but there are a lot of ones that sneak through the gaps - firefox, antivirus software, java, flash and so forth. I use Ninite (google it) which is a decent little program.
Make sure you have any particularly important drivers but Windows 7 (assuming that's what you're upgrading to) does a pretty good job of finding them for you. If you're going to stick with Windows XP, maybe get the important ones beforehand and put them on a USB stick.
Getting rid of partitions is easy, you can do it during installation from memory. But it's also apparently efficient to have one OS partition and one data partition, so that programs are on the easy to access region of the drive