XHTML version 1.0 is not yet modular. However XHTML 1.0 adapts HTML to the generic XML syntax. XML will serve as the foundation for the modularization.
So where does that leave you? There is no revolution under way but rather an evolution. You don't need to rush and redo your web pages in XHTML. The major browsers (Netscape and IE) are HTML browsers.
I think that, in order to prepare for the future, you need to choose your tools wisely. If you are still writing HTML with a text editor, you might wish to consider switching to a graphical tool.
In another issue of Pineapplesoft Link (http://www.pineapplesoft.com/newsletter/archive/19990801_xml.html), I described how I used XML to edit this newsletter. Thanks to this solution, it would not be difficult to adapt the newsletter to the Open eBook format, to WAP or to XHTML. I already enjoy the benefits today and I expect to gradually shift the whole web site to XML editing.
I think many web sites will undergo a similar evolution. When a company decides to support email, HTML, Open eBook, WAP, XHTML and goodness knows what else, it makes sense to introduce XML.
An alternative, particularly for small web sites, is to rely on your editing tool. I expect that tools like HoTMetaL, NetObject, Dreamwaver and even FrontPage will offer options to publish in XHTML and other XML variants of HTML. Therefore, if you are still writing your web site in Notepad, switching to a graphical editor may be a smart move.