Your question calls for an opinion. In my opinion, I would say that Windows XP does have certain advantages over the older Windows 98SE. For a "less advanced" user I think the Windows XP is a little easier. Certain elements of the Operating System are automated making it easier to use. And when problems develop (as they will with any OS), I think WinXP is easier to fix.
I myself continue to use Windows 98 (not the SE but rather the earlier version) and I find it still works quite well for me. I have modified it quite a bit over the years, adding system utilities and enhancements, but for my needs, it still works. Microsoft will stop all support for Windows 98 soon, so its useful life time is limited, making an upgrade necessary.
$99 is a fair price for Windows XP (I assume this is the Home Edition) and if your system can handle the increased RAM and Processor requirements of XP, I would suggest keeping it. If you're not sure if your system can handle WinXP, you can go
here and/or
here. The "SP2" referred to is a Service Pack update for the Home Edition that can be loaded via download if your Windows XP CD doesn't have it.
Also, the "minimums" listed are just that. The system will run, but only just barely. I think you should have at least double the minimum system requirements, and more would be better.
I hope this is of some help!
Dwight