Hey, i have an upgrade version too, and no you do not need a previous version of windows, there are two ways you can do this.
1. The easy way: download the windows xp startup disks, 6 disks, just make sure you use home version for home, and pro version for pro, which are available on microsofts homepage but are a pain i the ass to find, or you can go
here.
2. Slightly less easier way: you can go
here and actually create a bootable windows cd if you have a cd burner. Pretty easy to make took me about 15 min, and you don't have to go to the trouble of updating a whole lot of service packs, since you can make service pack 2 ready.
If you have any questions i'll be glad to help.