I've reformatted more than once for various reasons (usually a few months apart, and based on my changing needs for the system, not on any technical problems or whatnot). I use a "real" XP Pro install instead of the one Dell provided, and I have an SP2 install file as well. Makes for a clean OS. More recently, I installed all the OS, SP2, and drivers, then made an Acronis image at that point, so next time I decide to reformat it'll be a 10 minute process instead of an hour and a half.
re: Drivers - you're best off to go to Dell, ATI / NVidia, etc. and get the latest version of the driver for your device. That way everything will be up to date and will perform at its best. (BTW, don't let Windows Update provide a driver for you - Microsquish's drivers are often a mess, I've even seen systems not be able to boot after installing them. Avoid like the plague...)