Do you need SDO if you use XQuery?

In general, if you are using a technology that is meeting your needs, and it is in no immediate or foreseeable danger of becoming obsolete, I would say, "why not keep using it?" That said, both technologies provide essentially the same capabilities. If you are pursuing service-oriented architecture (SOA) and more specifically service component architecture (SCA), which is a standard for creating assemblies of multiple services, you will probably need to understand SDO at some point, especially if you reach a point where you are working with third parties through SCA.

At this point, XQuery is very much mainstream, SCA and SDO support is really just emerging, though fairly rapidly. One other consideration is whether you are working with any open source products that are particularly partial to SDO. Unfortunately, I cannot say whether this is the case with any or not.