A. When you use XP Mode, you're running a Windows XP installation in addition to your Windows 7 installation, so you'll need more memory than a standalone Windows 7 installation. The current recommendation is around 2GB of memory as the minimum. There isn't significant additional CPU usage, because you're still running the same number of applications, it's just that some will run under Windows 7 and some in the XP virtual machine. However, you need a CPU that supports virtualization and an additional 15GB or more of disk space.
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Check out hundreds more useful Q&As like this in John Savill's FAQ for Windows. Also, watch instructional videos made by John at ITTV.net.
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