XP actually runs quite a bit smoother and with somewhat less cpu overhead than 2k. It won't run as quickly as 98, but it will certainly be a much better OS than 98. So IMO the performance hit would be worth it.

Also, as the poster above mentioned, Microsoft's upgrade procedure is marginal at best... I would highly recommend just backing up your important files (or better yet make an image if you have the means) and wiping the drive clean. Put XP Pro on it fresh and you'll be much happier. The only other piece of advice I can give is don't use Internet Explorer! :)