I would go for Windows 98 SE, i'm running it with no problems. Me is basicly 98 with more bugs.

As for XP, I tried it and have gone back to 98 because it just wasn't up to what it should be, it would crash for no reason and was buggy. All my friends/colleagues that have tried it have gone back to their old OS's within a fortnight.

A positive note about Xp, it did run -nearly- everything.