1. Support from Microsoft. On April 14, 2009, Microsoft ended mainstream support for Windows XP. What that means is that you can't get free support for any problems related to Windows XP now;
you'll be pulling out the credit card to get help from now on. In addition, the only fixes Microsoft will provide for free are security patches. If there are other problems with XP, you won't get fixes for those.
On Aug. 14, 2014, all support for Windows XP ends. So you won't even be able to get security patches, and your computer will be open to newly-discovered threats with no way to protect you.
2. User Account Control. Yes, it's true that many people hated User Account Control (UAC) when it was introduced in Windows Vista. And in its first form, it was hideous, assaulting users with endless popup warnings. However, it improved with subsequent service pack releases. And in Windows 7, it's better than ever, and more configurable. That means you can tune it to give you as few or many warnings as you want.
Besides, no matter how much UAC was hated, it also closed one of XP's biggest security holes -- the ability for anyone with access to the computer to act as the all-powerful administrator and do whatever they wanted. Now that huge security risk has been eliminated -- assuming you don't turn it off.
3. More applications. All the programs are now being written for the Vista/Windows 7 platform. This started years ago, and will continue to be the case for years to come. If you want that new 3-D shooter game or kick-butt utility, chances are it won't work on XP. Upgrading to Windows 7 will give you access to all the cool stuff your neighbor has that you don't.
4. 64-bit computing. The reasons are a bit technical, but the upshot is that 64-bit is the future. While there were 64-bit versions of XP in the past, they aren't for sale anymore, and are not for typical consumer use anyway.
The newer 64-bit computers are faster and more powerful than their 32-bit brethren, and software is starting to appear that takes advantage of 64-bit power. While 32-bit gear and programs aren't going the way of the Dodo in the immediate future, the sooner you make the move to 64-bit, the happier you'll be.
5. Windows XP Mode. Through Windows XP Mode, you can use XP and still get the benefits of Windows 7. If you have the right version of Windows 7 (Professional or Ultimate), and the right kind of processor, you can have the best of both worlds -- Windows 7 and Windows XP.
Windows XP Mode is one of the coolest things about Windows 7. Without diving into the geeky details, it allows you to run Windows XP in a virtual environment; the old XP programs think they're on an XP computer, and work as normal. You don't have to give up the things you love about Windows XP to get the many benefits of Windows 7.
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