No, XP will not provide an upgrade from win95. You can make a clean install
and use your win95 disk as a qualifying product for the installation.

Rather than providing an upgrade pah (which would be difficult) Microsoft
has provided a Files and Settings Transfer wizard. You create a special
floppy disk using XP and then take it to the W95 machine.  It collects
whatever files and other data you want, and you take it back to the XP
machine where the data is installed.  It works best with CD R/W or a network
connection, because the volume usually exceeds one floppy, but it can still
be used with floppies, especially for important settings like your internet
connection.