The reason why they want you to go with the full package is that the Windows upgrade packages are notoriously flaky - since they don't perform a full low-level format and rewrite of the hard disk all sorts of problems can creep in.
There are people who know how to get the upgrades to work pretty well, by tweaking in lots of different ways to get rid of the bugs, but I'm not one of them.
One thing to bear in mind is that a computer with XP professional installed on it may not be ludicrously expensive, since there's a lot of old stock around and the latest machines come with Vista (which I really don't recommend) - buying a new machine and selling the old one may actually work out cheaper than buying the full XP professional package. And if you want to stick with your existing PC, check out other vendors, the college isn't necessarily the cheapest source. Take a look at this, for example:
http://www.buycheapsoftware.com/details~productID~3266.asp
I should stress that I've never dealt with these guys, they don't take overseas orders unless you want to spend a lot of money, but I've bought OEM versions of software from British vendors without problems.
You might also want to ask if they will allow you to use an alternate operating system such as Linux ; it's more or less free, and inherently more secure than Windows, but you need to get good advice (e.g. not me) on which of the current versions is best and how to install it for maximum user-friendliness.
