IMHO, the stability of 2000 is well worth the upgrade. I'm a systems admin and I have been monkeying with 9X/NT/2K for a long time. I finally found the perfect solution (for me at least!): Dual Boot with System Commander.
The reason I prefer this over the 2000 boot menu is that it allows you to hide the Win98 partition from 2000 and vice-versa. Before this technique, I had problems with Win2K occasionally making changes to the "Program Files" folder of Win98 and mucking things up. BTW, NEVER install both OSs to the same partition.
Overall, I have 3 partitions:
1) A 2GB FAT32 partition for Boot Commander and a "SHARE" folder for data that might be needed for both OSs. I also keep all my drivers here.
2) A small (4GB on mine) partition for 98SE, enlarged as needed when I find problem games or apps that don't work right in 2K (enlarged with Partition Magic). Let's face it, some games work a lot better in 9X, and some don't work in 2K at all (I agree with RadPike regarding ME, I think 98SE with the 7075 drivers is a better bet. I personally hate WinME) I also apply the 98lite patch which allows you to trim down 98 to the bare essentials, and also seems to improve stability. I use the "sleek" configuration of 98lite and my 98 boots up faster than ever. You can find 98lite here:
http://www.98lite.net/ (preview version is free, no time limit)
3) The rest of the space is an NTFS partition for Win2K. I use 2000 for nearly everything but "Need for Speed: Porsche Unleashed"
I have heard that the boot manager that comes with Partition Magic can hide partitions as well, but I haven't used it so I have no opinion about it.
The downside? More software to buy! I was lucky enough to have my company get it for me but most folks don't have this option. I would bet there is a freeware alternative to System Commander. Anyone know about a good freeware boot manager?
Best of luck!