Minor updates and bugfixes would be sufficient. Instead there are major releases which are bloated with graphical gimmick that just waste system resources but add nothing substantial.
XP entire security model is broken. Microsoft has tried to patch it as best they could but it is like adding suport to a house built on sand. Windows 7 is vastly superior from a security standpoint. There are whole classes of security vulnerabilities which affect XP only, 90%+ of botnet nodes are Windows XP machines. Sure you could use a patch which completely rewrites the core processes of XP but you would essentially be creating Windows 7. There is absolutely no reason to be using Windows XP at this point (or even four years ago).
If Windows 7 offered nothing else the inclusion of Address Space Layout Randomization (ASLR), PatchGuard, UAC, and Protected Mode Internet Explorer make it inherently more secure than Windows XP can ever be.
Even if this is true, security can't be a valid explanation for such massive wasting of system resources by later versions. Taking into account all odds I also doubt that Windows 7 is more secure. Who knows which (new) backdoors have been installed by three-letter organizations? It's also not always the best idea to have the newest version (see OpenSSL). Apart from that the probability of attack declines with lower market penetration, because there is less incentive to develop new malware for systems with few users.
So if I leave XP I'll go for Linux (a lightweight distribution).
Windows XP is completely shit because it has a limit of RAM and physical processors.
Not relevant if you have an older computer. On older computers it's much faster than any of its successors. And apart from newest games you can use all applications. So there's a reason why many businesses haven't updated yet: There are costs but no tangible benefits.
Well no. Browsing or downloading with Windows XP is the best way of getting tons of viruses, spywares, trojans & keyloggers.
Watching movie offline is fine.
This depends on your security settings, your behavior and the browser you are using. I'm using firefox with various security/privacy plugins with JavaScript deactivated by default.