While they are all named Windows, there are in fact two distinct OS lines that have been developed at Microsoft. Windows 1.0 through 3.11 were never really OSes in the first place - these were graphical DOS shells. Windows 95 finally merged DOS with Windows into a cohesive OS, along with all the deficiencies of the by then venerable 16-bit DOS (the Windows kernel was in fact partly 16-bit, partly 32-bit). This OS line continued through to Windows ME. Considering the progression from Windows 1.0-3.11 line, the choice of Windows 2000 as the stepping upgrade to Windows XP is extremely odd - that OS belongs to the completely unrelated Windows NT OS line. This consumer Windows OS line was thankfully finally terminated with the Windows ME release. Enter Microsoft's premier business OS line - Windows NT. Initially released as version NT 3.1 in 1993, it progresses through NT 3.5, NT 4.0 and Windows 2000 (NT 5.0). Finally, Windows XP (NT 5.1) merges the consumer-oriented features of Windows ME thus finally signing the death sentence for the DOS/Windows line. We've since witnessed Windows Vista (NT 6.0) and Windows 7 (NT 6.1). To keep things interesting, Microsoft actually spun a new OS line after Windows XP - for server installations (it's been in existence since early Windows NT really, but with Windows XP came the divorce in names). We've had Windows Server 2003 and Windows Server 2008 released so far (with Windows Server 2011 coming soon).
Observant readers might have noticed a development cycle in Windows NT OSes somewhat reminiscent of Intel's tick-tock cycle of architecture changes and die shrinks. In Microsoft's case these are major feature development and polishing. Unsurprisingly, the major feature releases aren't popular and considered by the mass public as flops - Windows 2000, Windows Vista. In contrast, the minor version releases (Windows XP, Windows 7) have become very popular. If Microsoft keeps this development philosophy (I hope they don't...), the next consumer version of Windows is bound to be another public disappointment.