No idea what's best..........:-)
No idea what's best for webcam either.

But, my PC has been using XP for a year now with no problems and not one BSOD.
I like it, so far so good.

I would imagine that XP probably needs more processing powere, so for a 2 year old computer, you're probably OK but check the min specs first.

Now if I had the time and energy (unfortunately I have neither*), I'd convert that ol' PC to a Linux box and use it as a server/firewall/router for your internet needs...........
You'll probably find various webcam drivers for it too.

Bonne chance!

*which is why my old P1 is gathering dust with an easily fixable memory fault