You have the most stable version, the version of Ubuntu intended for
businesses, server use, etc. 6.10 is the current version, which contains latest
innovations, but is a bit twitchy compared to 6.06.1 LTS. There is yet another
release due soon, but no need to worry about your version as Canonical claims to
support it for at least a couple of years yet.

Yes, in my opinion it is easy (once familiar with the OS) to install for a
dual boot. Normally things go smoothly when Ubuntu is installed after XP (as
opposed to the other way around). I am sending this message via Outlook Express
(XP) from a HD which Windows shares with Ubuntu. I have split this particular
80GB HD into two 40GB segments for each OS and everything seems to work
swimmingly thus far.

I would suggest using "Guided Partitioning" in order to achieve your goals.
You will be presented with several options; choose to resize the XP partition,
and make sure there is plenty of room for Ubuntu. (Minimum requirements are
listed, although you would do well to allow for more space)