Just keep Windows 7. It has the best power management so your battery will last longer. Reduce the eye-candy if it feels sluggish and/or install more RAM.
You are right. I was under the impression that 7 and even Vista had better power management than XP, but quick googling showed that 7, while better than Vista, is still a bit behind XP.
Well first off, why on earth is that machine even running Windows 7 when it doesn't even meet the minimum requirements for the OS??
If you want to run Windows 7 on your PC, here's what it takes:
1 gigahertz (GHz) or faster 32-bit (x86) or 64-bit (x64) processor
1 gigabyte (GB) RAM (32-bit) or 2 GB RAM (64-bit)
16 GB available hard disk space (32-bit) or 20 GB (64-bit)
DirectX 9 graphics device with WDDM 1.0 or higher driver
Put another 512mb (if you can find it) minimum in there if you want to keep Windows 7
As for the question, Win7 is definitely better than Vista performance wise on the same hardware, wouldn't say it was quite as snappy as XP though I've not done a direct comparison, just a XP vs Vista on same hardware and Vista vs Windows 7 on same (different) hardware. I'd put Windows 7 closer to XP than Vista though.
Only issue with XP is that it's not going to be supported very much longer. Though who ever uses microsoft support anyway?
Whatever you do, don't go back to any 9x version of windows, unless you enjoy running out of date applications