Here's the official word from Microsoft on the recommended system to run the newest version of Windows.

Hardware

A faster Pentium or Pentium IIpowered PC (166 megahertz or better).

At least 32 megabytes of RAM.

4-gigabyte hard disk.

TV tuner card.

DVD drive.

56k bps modem or ISDN.

USB (Universal Serial Bus) capable

15-inch monitor with dot pitch of 0.28 mm or less.

accessories

Color inkjet printer.

Sound card and speakers.

Scanner.

Videoconferencing camera.

Digital still camera.