Software packages, more and more, are coming as large download files – I wouldn’t even attempt to do it on dial-up! There may be a few options for you that will work.
Moving to a new operating system is rarely “seamless”. But if you go about it step by step you’ll end up with a stable system that will last for years.
Older games need a different operating system than the one provided by Windows 7 or 8. With a virtual machine, you can run Windows XP (and your games) on any machine that has enough power.
You may want to switch to 64-bit just for the speed that comes from being able to use all of the RAM on your computer. Ultimately, it comes down to what you use your machine for and your own time and resources.