A year ago, I'd have said stick with what you know best. At the moment, XP is by far your best bet.
2000 is a little leaner, but you pay for that leaness (is that even a word?) with less features for the "home" user, such as native digital camera support (plug it in, it opens automatically, no extra software needed).
XP is also a thousand times more stable than 98/SE/ME, I've seen one bluescreen in about six months, and that was because I was messing around with drivers 😉
Bottom line: make sure you have 128Mb RAM at the very very least- 256Mb is way better. Processor speed is not really a priority, 500-600Mhz will do fine. Plenty of RAM and a fast hard disk offset a fast CPU, as they're pretty much the biggest bottlenecks in the system (RAM size, not speed, that is).
Maybe you could find a friend who has XP and play with it, see if you like it. It can be complicated, but for the most part, it's a lot easier and friendlier than 98 ever was. IMHO, it's the OS that Micro$oft got "right".
Oh, and dual-booting really isn't worth it unless you're evaluating it! 🙂
Dopefiend
Edit: Doh, you have enough RAM. XP will rock that config, you'll be surprised how quick it is considering how much more is in it than 98. Hope this helps!