If you are confused as to what will happen when Microsoft stops supporting XP, now's the time look into it. wsj.com put together a very good video explaining the implications of hiding from this issue.
I've had many people tell me, "Well, I just keep my anti-virus up to date. That's all I need, right?" Wrong. Think of anti-virus as taking vaccine for a virus. This helps your body fight against a virus that gets into your body. This is the same with anti-malware protection.
Updates to your operating system would be more like wearing a hasmat suit. Everytime you notice a tear in the suit, the manufacturer creates a "patch" to fix it. Microsoft is the manufacturer, and XP is the hasmat suit you are wearing.
Microsoft is basically saying that they are going to stop patching the suit. Next time it gets a hole in it, you are on your own. No matter how many vaccines you take, there is bound to be many other things that can get through those holes that you don't have a vaccine for.
So, think of XP as an old suit, with many layers of patches all over it that is just so threadbare, that you just can't patch it anymore. This is when you need to just throw it away, and don a brand new suit.