if you are still on 98, get XP because the machine you are one, unless it built like a brick **** house, wont handle Vista. Unless you want to build another machine, get Vista
Personally, I'd wait for Vista. Unless Windows 98 is bugging you big time, you should wait for Vista. I'm not really sure when Vista will be out but if it's a long wait, you'll have to be patient.
Vista will be out soon and normally I would say wait for Vista but I agree chances are your hardware will not handle Vista effectivly.
I'd also stay away from XP Home since support will end soon acourding to an article warez posted.
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Edit: Your hardware requirements are fine for the beta but I am not sure if they will be enough for the final product to run things at high speeds but you will be able to use the OS but will you be happy with the performance I don't know.
Microsoft has released some very low specs while others "speculate" that it will need 4GBs of RAM and no video card on the market will run it. I would honestly wait and see what the requirments are when it is released in 6 months or so if you can wait that long if not go for XP just be sure it isn't the Home Edition.
So some of you are willing to buy hardware just to get more eye candy in the interface? Why? Why sacrifice processing power for an interface?Is vista gonna be multiuser? Is it going to have a decent commandline interface this time around?
I would think the DRM restrictions they plan on adding post release of vista alone would turn most people off.