Problems seem to arise when upgrading your OS when one is already installed ie. running 98SE, sitcking the disc in and hitting Upgrade.
If you're going for a full reformat anyway then give it a go, if you don;t like it or it's not as stable for you then just put 98SE back on.
I've heard a lot of bugs have been fixed in ME (and the Defrag is a lot fster), but also quite a few people seem to have problems. It'll probably love your system and run perfectly, or just die, and you'll have to go back to 98.
MS have stopped supporting 98, I think the support is still there for ME though. (Please correct me if I'm wrong)
We had nothing but trouble with ME and later after after the PC died (I swear it was ME fault running stuff in the background and brunt the thing ouy) were able to get a pc with XP Much better and 98se is much better too