I am running Windows XP on my Laptop and I want to switch to Linux. I want to know if I need to format my system totally? How easy to switch?
Nowadays there are many distributions that are easy to install and use, for example Ubuntu or Fedora.
Which one we recommend depends on what you want. If you want to be able to watch DVDs and play MP3s then you better choose Ubuntu because Fedora doesn't support patent-tainted formats like these. But if you want a completely free distro (free as in freedom), and if you don't care to have no support for formats like the named ones, then Fedora might actually be a good choice.
I think a good step would be checking Get GNU/Linux.org, which contains a lot of information that might interest you.
Also PolishLinux.org might contain some information you could use. Especially the page where you can compare distributions with each other might be helpful for you.
Now for your other question: You can reformat the computer and wipe off Windows, but since you already ask I don't think that's what you want. For this there are also options. You can resize the Windows-partition in order to get free space and then use the newly freed space to install Linux.
Windows should then, during installation, be detected automatically so that you get an option at boot-time to choose if you want to use GNU/Linux or Windows.
I don't actually know if Fedora and Ubuntu offer the possibility to resize an existing Windows-partition, but I guess they do.