Hi Mike,
  Thanks for further educating me.

> Now the questions is, is xsl:template name= ...
> able to do something, which xsl:function cannot do?

Depends what you count as "able to do something". For example, a named
template can declare default values for parameters. Does that count?

Yes, that's the difference which is significant for me. So I guess,
this is the only difference between named template & xsl:function? I
am not considering syntactic differences.

Yes, you can:

<xsl:template match="/">
 <result>
   <xsl:sequence select="xx:dummy-func()"/>
 </result>
</xsl:template>

Thanks for telling this to me. So for me, this difference does not
exist any more..

--
Regards,
Mukul Gandhi