Yes and No, You can actually do a Duel Boot system also. Since you already have win 98 , IT might be something to consider, to just Stretch your PC skills abit.
But as Jerry said, Copy that, and anything else you might want to save. The thing is, even with an Upgrade, You'll be downloading Updates for at least an hour ( Broadband) , so Take the time and Save everything you think you might need. Including What Toasty said.
Of course Writting a Batch file for a dual boot, is easy; and Considering The Differance in Hard Drives , I's Strongly suggest IT if at all possible. That Is If your familier with Win xp, Of which I like alot.
Now If you want to do a triple boot, I suggest you ask Nemesis, or Javora.
Stephen