The key problem is while Win7 can run in an old box well with 1-2GB RAM, if you have peripherals in the hardware that are no longer supported you could be in for a wild ride.
Thus, If you do upgrade a box OS alone, it may not be worth it, but Win7 is good bet. Better if you get it with a new box.
Know there are some very quietly kept interactions with hardware and drivers that can be difficult to diagnose and fix.
The most heinous is SYSTEM INTERRUPT based driver issues causing CPU cycles to run high while the machine is doing nothing. This doesn't slow down the machine noticeably because the interrupt can be given low priority when the CPU is given a priority task, but it keeps the CPU running hot because its always running, when you are idle, it will take all the available cycles.
You can google it to find more about it.
This is often caused by USB, audio card, video driver, disk drive etc., drivers and worse BIOS based issues. Some of those peripherals are built into the Mobo by companies that have been absorbed by bigger ones, or simply no longer exist or not supported, such as Award BIOS, which is now part of Phoenix.