With Ghost you can change the drive type (Which you can not do in Windows anyways as all Windows require to be on a Primary Partition. Not Logical or Extended) and capacity. Ghost only takes the Used drive space. Unlike Acronis which also takes the free space.
So with Ghost you will only take the 20GB used by XP and clone that part. Not the 200GB of free space. So if you choose to put it in a smaller partition than 250GB you can. As long as it can hold your current capacity you are fine.
I used to Image my drive as well. It was very worth while. Make a clean image after you get all updates and drivers installed let alone Apps. The issue i ran into is that i started to mess around with so much other stuff like Betas and different apps that my Images would be outdated in a week and be useless. Let alone the DVD's needed to burn that much space.