Office XP is an older version of Office 2003 and Office 2007 with Office 2010 out in beta format.
2007 was a significant upgrade and introduced the ribbon interface which is why it may be talked about as 2 different programs. There are different versions of Office but all come with Word and Excel. Other versions include Publisher, PowerPoint, Outlook, etc.
OpenOffice is a free program that in many ways has the look and feel of Office XP and 2003 and is nearly as good as the MS version.