Well there's certain features like the 5.1 encoder that require a newer OS than Windows 98. Afterall, Windows 98 is a six year old program and horribly outdated compared to XP. I have XP and have no intentions of willingly going back to 98, 98SE or Windows ME, ever.
XP is a much much better program, and 100 times more stable than Windows ME ever was. As much as I hate the thought of giving Bill Gates any more money, I do have to say XP is a good buy, and worth making the upgrade.