well, you can use either CD I believe, as the upgrade CD is made for this purpose. But if I were you, I'd try to get the normal cd not the upgrade, because if you ever want to do a clean install of XP, it makes it a lot easier to have the real version. After saying that, the upgrade CD is $100 less than the full version.
One thing you should know about doing the upgrade. I have heard (I did a clean install) that your system will be slower with the upgrade than it would be w/ a clean install. My suggestion is if you don't have a cd burner, get one and buy yourself 50 or 100 cd-r and burn everything on to cd and do a clean install. This also makes it easier to reinstall everything if you ever commit a sin XP doesn't like and you have to reinstall. Good luck!
Like all MS "Upgrade" CD's I am sure that it holds a full install, the only difference is you need the CD from a Prior version in this case 98 on up. You pay 100$ less because you have already purchased the original version which you are upgrading from. All you would need to do in order to do a clean install is do a format, then insert your Winxp upgrade CD begin your installation and at some point during the installation it will ask you to verify your windows CD that is when you stick the Full Win98 on up into your CD Rom drive and Voila a clean install with an Upgrade CD.