Why not clone your current hard drive to the new drive? Then everything transfers: OS (with all Windows updates), programs, settings, your own data. Clonezilla, for example, is free and would do the job perfectly.
It's only an issue if the old drive is IDE and the new drive is SATA, or the other way around. But if that's the same a clone should work. Depending on the program you use to clone it's possible the new partition will be 40 GB also, so that you'll have to extend it to 120 GB. Any partition manager (GPARTED is free) will do.
I don't have Dell recovery disc for my Inspiron 6000. I am in the process of replacing the 40GB hard drive with a 120GB hard drive and will need Dell drivers. On the Dell website support/drivers and downloads page this particular model with my service tag shows a total of 15 drivers: 1 is considered URGENT, 5 are considered RECOMMENDED, and 9 are considered OPTIONAL. Is there any reason that I should not download all 15 drivers? I am assuming that it won't effect the operation of the laptop if all 15 are installed. I am essentially starting from scratch with a new hard drive and will be loading a retail version of Win XP with sp2.