WHat the hell are you guys talkin about? A firewall isn't useless inside a domain. I'm running over 150 windows xp clients, and about 100 windows 2000 clients. All 150 XP workstations are running a firewall, sure it adds a bit of processing overhead, but we haven't had any problems with compatibility between applications and server connections.
Also, you can adjust the windows Xp firewall in a flinch via group policy... I guess if you aren't running an active directory domain, it could be a pain.
If someone is going to attempt at hacking your network, it's most likely going to come from the disgruntled employees on the inside anyways. Not having a firewall on the workstations themselves is only going to make it easier for them.