You said "remove the server" - if that means basically tossing it out, then all you really need to do is remove the XP machines from the domain (change them to workgroup).
What about printers? Are you just going to have them locally attached, or access them with TCP/IP? With only 5 client machines, it should be ok to have them talking directly to the printer(s), but you might want to set up one lightly-used client to be a print server and get some of the monitoring benefits.
ADDED: Yeah, if you want the users to have the same profiles, you'll have to copy the domain profile over. For each PC:
- create a local account for the user
- log in to the domain as an administrator
- right-click My Computer, select Properties, Advanced tab, click the Settings button under User Profiles
- select the person's domain profile and click the Copy To button
- browse to the Documents and Settings directory for the new local account, and for "Permitted to Use" select the local account