I have to put my handfull of change in.
Stay with windows 98. Anything winME has over Win98 is minor and can be produced in some way or better on win98.
There is no need to get WinME.
Even though I hate WinME ( I could write a book on why), it works awesome for a lot of people.
WinME (win98 third edition) is kind of like IE6. It works great for some, and others just end up having a horrible time getting it to work correctly.
If you do go with WinME, you will lose dos and may notice your computer is slower than before, but if you decide on winME, it would be wiser to do a fresh full install of it instead of an upgrade. (same goes for the IE6 too)
"if it ain't broke, don't fix it, just tweak it!!!!!"