XP or 2000 are far better choices for a modern pc make no mistake about that.
The 98SE was just a free solution to his lack of resources, a plaster so to speak. It's the best performance boost he can get without spending a dime.
I tried installing 98SE to my sons gaming rig and I fell apart immediately. I had forgot how crappy OS it was.
It's fast, but pretty unstable using the nforce1 I had lying down.