Yes you can perform an "In-Place" upgrade and all your personal data and software applications will be available in Vista (Provided they are Vista compatable).
As always you should create an Image backup of XP before you start the upgrade just in case. Also verify you still have your XP product key. If not then use one of the product key finders listed below.
Also: http://windows.microsoft.com/en-US/windows-vista/Upgrading-from-Windows-XP-to-Windows-Vista
----------------------------------------- Product key finder software ---------------------------
Here are some utilities, all of which will display your product keys:
Belarc Advisor: http://www.belarc.com/free_download.html
(It does a good job of providing a wealth of information.)
Also: http://www.magicaljellybean.com/keyfinder.shtml
and: http://www.nirsoft.net/utils/product_cd_key_viewer.html
Note: Also check the side of your PC case or bottom of the laptop for the
OEM key code. If there is a sticker with the code it will most likely not
match what is displayed by the utilities mentioned above as OEMs such as
Dell use an internal key code when they build your PC.
The key code on the sticker is for use with your Windows CD
(that hopefully came with your PC) if you ever need to reinstall Windows.
--------------------------------- Image Backup Software ---------------------------------------------
Acronis True Image 2011 - has a fully functional 30 day trial version available,
(Note: Install Acronis and then create a bootable Restore/Rescue Media CD before you start creating your first image backup)
http://www.acronis.com/homecomputing/products/trueimage/
Version Comparison: http://www.acronis.com/homecomputing/products/trueimage/comparison.html
True Image User Guides and documentation:
http://www.acronis.com/homecomputing/download/docs/
Free alternative:
EASEUS Todo Backup Home V2
(Note: Install Todo and then create an "Emergency Disk" before you start creating your first image backup)
J W Stuart: http://www.pagestart.com