this is the way i see it:
if you are not going to use your computer in the next few hours, or have been doing something intensive, then shut down windows. after a restart, xp is normally quicker and more reliable.
the difference between standby and hibernate is that when you press standby, the system simply goes into a low power mode, and keeps refreshing the RAM. if you turn the power off when it's in standby, you're effectively force shutting down windows (but not the hardware). standby also uses a bit of power.
hibernate meanwhile saves all the data from RAM onto the hard disk and fully shuts the hardware down. when the system is in hibernate, it's safe to turn the power off, as all the data is safe on the hard disk.
if you are going to use the computer soon, and or haven't done much, just hibernate.
i prefer not to use standby, as you often can't tell whether the system is in standby or shutdown, and i often flick the power switch thinking i had shut it down.
hope that helps.
john