Anyone who can run 98 and applications on 1GB of space for "a few years" deserves praise indeed.
You are ideally placed to use Ghost or Drive image
Don't go overboard with the new HD
40Gb+ will be enough space to manage with for yonks and you won't have any oversize problems with 98's acceptance of it.
Your twin partition will be worth repeating in fact your good habits have allowed you to stay afloat this long.
Suggest you first swop the old for the new HD for safety No need to use a screw driver yet, just burgle the power and dat cables from the old drive and let the new on hang somewhere safe as long as you dont disturb it while running ............. Boot from your setup floppy, FDISK to a C: (about 5Gb) and D: the remainder..............Then reboot and FORMAT both drives in turn.
Now put the new drive in somewhere so that it is secondary master, and with the old drive back as it was. reboot normally and make sure that windows runs as usual and that you now have 2 "new drives" (E: and F:)
If fall this is happening as it should it is back to a Ghost-made floppy to boot and make an image of your C: on F:
Next boot again from this floppy and "restore" the image on F: to your new E: (soon to be C:drive).
Next make an image of existing D: drive on the new E: where it will be safe for the final stage.
Now you can restore this image to you big new F: drive. As always the restore process will wipe everything off the target so the already used old C: image will disappear.
It is better to have some courage now and remove the old workhorse, and make your new HD the new Primary master.
Caution when making sweeping changes like "restore" to be sure you are setting the target right. I find it very helpful when formatting, to give the new drives a simple defining name like 'OS' for what will be the new C: or 'Data' for what will become the new D:....... It is easy to be confused when in the middle of all this the two "C" partitions" group and both "d"s which is out of the expected sequence.
It seems a lot to do but is just step by step with no other hardware changes and a happy system it has to be worthwhile.