"Give me one good reason to switch?"
In my case, there were two. Firstly, using Win7 at work, I find it easier to use the same at home. After a while using Win7, XP feels really clunky. (At first, it's the other way around. And, yes, I use classicshell.)
Secondly, I moved to an SSD. Win7 provides TRIM support, XP doesn't.
Then there's new features such as bitlocker, newer DirectX, etc.
But bear in mind, I never suggested moving for the sake of a newer version. I mentioned that, in my view, a re-install every so often is beneficial. That's a convenient time to upgrade, if you're so inclined, but not essential.
And, as mentioned, I have sometimes kept the OS intact when changing machines (via sysprep). Changing OS and changing hardware are already separate questions, without bringing VMs into the picture.
"There are zero apps I have encountered that require anything newer than XP and which offer even a remotely compelling reason to switch."
We're starting to see some apps where 32bit is treated as legacy, and the expectation is for 64bit. Rare, so far, and specialist stuff, but I expect that will become more common.
"Al you’ve presented is fearmongering..."
Nope, just personal experience after having dealt with automating windows installation, one way or another, since the NT4 days, in an environment with 1000s of PCs and a wide range of hardware types (including departments that can buy their own kit and expect to put our image on it). I find, in practice, that a clean install every 18 months or so has significant benefits. This isn't an idle or untested view, although it obviously relies to some extent on what typically happens to that machine over that period.
I think you'll find that 'Windows needs a re-install every so often' is quite a widely held view, but YMMV.