Of course dropping win98 support isn't all just life cycle, every thing MS does is based on marketing. Everything. People are beginning to seriously need to upgrade there computers. Most people know someone that is computer savy, so instead of going out to by new computers (that come with windows pre-packaged) they simply head down to the local computer store and get a barebones, or have their couson or son or something order parts from online places. That way they can get a new computer at maybe 70% of the price of a computer from a big store like Dell or whatnot.
And since win98 is probably still the most commonly used OS out their, many people would simply install a old copy of win98 on the new computer instead of spending the extra hundred dollors on a xp liscence.
This way by dropping support you are ensuring that win98 will no longer work with new computer parts, so they are forced to upgrade.
This is just the sort of thing that you have to expect to deal with when you deal with MS.
If you don't like it their are plenty of OSes that don't involve such tactics. For instance I use Debian. It does continous updates, I update it on a weekly bases, so I never have to worry about it becoming obsolete like win98. Gentoo is another OS that does continuous updates. Redhat can be used that way even, but they have version numbers more like traditoinal software companies.
So use your voice as a customer of MS and show them that you don't enjoy being dropped off the support radar you've paid for....