I cannot say anything about recoding it in Java. Depending on whatever the code base does, it might be a good option, given that you say you are experienced with Java (and, I assume, not with Delphi).
Regarding Upgrading to Delphi XE2:
Check whether any 3rd party components have been used.
If not, you will probably be able to upgrade to Delphi XE2 with very few changes.
If yes, check whether the source code of these components is already available.
If not, you will have to buy new licenses of these components (and this time take the license that includes the source code!) if you want to upgrade to Delphi XE2. If you are really unlucky, the company who developed these components has gone belly up. Then you are either stuck with Delphi 2006 or you will have to find a replacement for these components.
If you already got the component's source code, you might still want to check whether to upgrade them to Delphi XE2. It might save you some headaches. Upgrading well written components is not a problem for an experienced Delphi developer (I have done so countless times over the years), but might prove nearly impossible for somebody who doesn't know the possible pitfalls.
The only breaking change between Delphi 2006 and XE2 (actually it happened between Delphi 2007 and Delphi 2009) is the switch to Unicode strings. Switching an existing code base might be painless or a real pain in the lower back, depending on how well written it is to begin with and how it (ab)used strings.
Another option you have not yet mentioned, might be upgrading to Delphi 2007, which basically was more of a bugfix to Delphi 2006 than a real release in its own right. If I remember correctly Delphi 2006 packages worked with Delphi 2007 without even recompiling.
NativeInt
used widely instead ofInteger
). However it's definitely the best choice as far as I can see. – Palladin