MANDO, Skuzzy is correct on the poor memory management with Windows 98. It can't handle over 256Mb very well (if at all), not to mention security issues and spyware problems you'll have.
(I would know, I am a senior IT manager at a government service centre and bonafide windows guru)

By moving to XP, your hardware can take advantage on how the operating system (OS) utilizes the memory and process management.
The biggest factor and motivator however, is personal security of your computer. Hackers can get access to any window98 machine on the internet. It's like having a fly-screen door(98) to keep out thieves, vs an iron plated shield (XP).
When I upgraded to XP Pro, most games ran around 20-50% faster FPS wise.