I've used 98 - good, ME - bad, and XP - good. I'm not trying Vista. looks like MS bloatware, nothing there for a cnc control except trouble.
I prefer XP at this point for features outside of the control. You can't have a virus program running while you're using the machine and you can't have it downloading updates either.
I migrated away from '98 because of issues with USB, DVD drives, large hard disks etc. In general, you can't expect driver updates on a dead OS.
There used to be a section in the Camsoft manuals saying they preferred '98 and another section showing how to get better real time performance with XP. It may have been pulled, I don't remember coming accross it in quite a while.