The main concern with upgrading from Windows 98 to Windows XP is to check that your computer will actually meet the minimum system requirements for it. And having said that, it might be worthwhile saying that meeting the minimum requirements (to let Windows XP run) may still mean that your computer runs like a snail. Often times, a lot of people upgrade without realizing that Windows XP requires a lot more system resources (in terms of memory and harddrive space to install) than Windows 98. The other complication is that if you have older software, while XP has a pretty good hardware driver database, if it doesn't have the drivers you need you might be sunk if you can't find them anymore.
If you're looking to upgrade the OS and need a new computer too, it might be worthwhile doing both at the same time so you save on the OS (like previous posters said).
Hope this helps