In the case of a defining relative clause it really does not matter, both tht and which are correct.

In a non-defining clause it matters and WHICH is the correct choice.

I am confident about it in UK Englsih, but I've heard it said that usage is different in the US.

In fact, in your given context, either could work, but would create a subtle change in meaning.

'that' introduces a direct connection, 'which' intodruces a subordinate clause:

"The car that hit him failed to stop"
"The car, which had been stolen earlier that day, was later abandoned"

--------------------------------------------------
Note added at 20 mins (2006-05-01 13:23:59 GMT)
--------------------------------------------------

Here's how Oxford USage puts it: (!)

which or that (relative pronouns)

There is a degree of uncertainty about whether to use which or that as the relative pronoun qualifying a non-personal antecedent (for personal antecedents see *who/whom or that).

The general rule is that which is used in relative clauses to which the reader's attention is to be drawn, while that is used in clauses which mention what is already known or does not need special emphasis.

Which is almost always used in non-restrictive clauses, i.e. those that add further information about an antecedent already defined by other words or the context. Examples:

The men are getting rum issue, which they deserve (Susan Hill)

Narrow iron beds with blue rugs on them, which Miss Fanshawe has to see are all kept tidy (William Trevor)

· The use of that in non-restrictive clauses should be avoided. It is not uncommon in informal speech, and is sometimes employed by good writers to suggest a tone of familiarity, e.g.

Getting out of Alec's battered old car that looked as if it had been in collision with many rocks, Harold had a feeling of relief (L. P. Hartley)

It should not, however, be used in ordinary prose.

Both which and that can be used in restrictive relative clauses, i.e. clauses that limit or define the antecedent.

There is no infallible rule to determine which should be used. Some guidelines follow:

1. Which preferred.

(a) Clauses which add significant information often sound better with which, e.g.

Was I counting on Israel to work some miracle which would give me the strength? (Lynne Reid Banks)

Not nearly enough for the social position which they had to keep up (D. H. Lawrence)


(b) Clauses which are separated from their antecedent, especially when separated by another noun, sound better with which, e.g.

Larry told her the story of the young airman which I narrated at the beginning of this book (W.Somerset Maugham)


(c) When a preposition governs the relative pronoun, which preceded by the preposition is often a better choice than that with the preposition at the end of the sentence (see also *preposition at end), e.g.

I'm telling you about a dream in which ordinary things are marvellous (William Trevor)

(A dream that ordinary things are marvellous in would not sound natural)

The inheritance to which we are born is one that nothing can destroy (NEB)

(The inheritance that we are born to would sound very informal and unsuited to the context)


2. That preferred.

In clauses that do not fall into the above categories that can usually be used. There is no reason to reject that if


(a) the antecedent is impersonal,

(b) the clause is restrictive,

(c) no preposition precedes the relative pronoun, and

(d) the sentence does not sound strained or excessively colloquial.

Examples:

I read the letters, none of them very revealing, that littered his writing table (Evelyn Waugh)

He fell back on the old English courtesy that he had consciously perfected to combat the increasing irritability that came with old age and arthritis (Angus Wilson)

In these examples, which would be acceptable, but is not necessary.

When the antecedent is an indefinite pronoun (e.g. anything, everything, nothing, something) or contains a superlative adjective qualifying the impersonal antecedent (e.g. the biggest car, the most expensive hat) English idiom tends to prefer that to which:

Is there nothing small that the children could buy you for Christmas?

This is the most expensive hat that you could have bought

Note that that can sometimes be used when one is not sure whether to use who or which:

This was the creature, neither child nor woman, that drove me through the dusk that summer evening (Evelyn Waugh)

i wish it can serve ur purpose.

--------------------------------------------------
Note added at 15 hrs (2006-05-02 04:40:21 GMT)
--------------------------------------------------

http://www.bartleby.com/116/205.html