It depends on what you need the space for.
Example, consider that now you have your C:\ drive where XP is installed and it is 10Gb, then you have the D:\ drive where Windows2000 is installed and it is 5Gb.
First, if you simply delete the partition containing the Windows 2000 you also have to be sure to modify your <i>boot.ini</i> file in order to remove the Windows 2000 option.
Once you have deleted the partition, if you don’t want to use a partition resize tool to assign the free space to the C drive, you can use the free space as D:\ where you can store your documents, downloads and other files. This setting is recommended because if in the future if you need to format your C:\ drive, the data you saved on the D:\ drive won’t be lost.
Second option is to remove the partition where Windows 2000 is installed and then resize the partition with some external tools.
My 2 cents: keep the unused space as an additional partition where you can save your data, this is easier and safer.