WinXP is great for gaming. I can run all my kids win 95/98 games on it. Occasionally, I will have to set compatibility mode in the shortcut properties for the game, but this is easy and has worked fine for all the games I have.
XP is also very stable. The only hangs I have had in 6 months of using it were when I pushed my OC too high. The rare occasion that a program crashes, I have almost always been able to just ctrl-alt-delete and end it without any reboots or anything.
XP is a memory hog, but with 768, you don't have to worry about that.
So if you are irritated by crashes and reboots with 98, go ahead and upgrade.
If not, I'm not sure there is much advantage to forking out the cash.
If you are a gamer, I think a video card would be a good upgrade for you. Of course if you get a Radeon 9700 or something, your cpu won't be able to feed it fast enough, especially with PC133 RAM. But my guess is something like a GF3 or a Radeon 8500 would give you a good performance boost for not too much money. By the way, I've got my Gainward Ti 200 Golden Sample running completely stable at just over Ti 500 speeds(240/510). Check out
Tom's VGA Charts for a performance comparison on a number of cards from the TNT2 all the way up to the GF 4 and Radeon 8500 cards. It's the most comprehensive comparison I've seen and really helps in figuring out where all the different models of cards line up as far as performance. I think they have the Radeon 64 Vivo in there so you can compare.