How was it better than Win2K?
Taskbar grouping.
ClearType.
Remote Desktop.
More games ran on it (mostly thanks to higher DirectX version).
From developer perspective, XP was the first version of Windows with registration-free COM and side-by-side assemblies, which (if used properly by app devs) fully solved the "DLL hell" problem.
Better support for dealing with "we never tested outside of windows 98" apps.
early version of SxS.
Various small enhancements.
Didn't care for the UI, though - looked childish...
As for UI, it was very easy to switch to classic mode.
No, it didn't. You had to use some 3rd party software for that.