Hmm, I do think people blow the instability of Win98 up too much. I'm running Win98 right now, and it's running as an FTP & webserver, both internaly as to the web. I have an uptime now of 9 days. Remember, this PC is actually used besides being a server (games, MPEG encoding,...).
Granted, Win98 isn't suitable for large corporations, but for home users, it does the job perfectly.
EDIT : For the original poster. Win98 doesn't include server software by default. But there's plenty good freeware software you can use. For FTP & webserving, I use xitami (
http://www.xitami.com/). You can also use several other tools. Like
Guildftpd for FTP-serving and the Win32
Apache port. I prefer xitami above everything else, since it's lightweight and really easy to set up.
And for internet connection sharing : Win98 SE includes all necessary software by default. If you want to use other tools,
nat32 is among the best for Win32. You can find a setup guide right
here. I hope this gets you started.