Yes, you can install windows 2000 on top of 98se by taking the upgrade path, although a format and clean install is always better.
Check before you switch to Windows 2000 that your important hardware and software are compatible with Windows 2000. Since Windows 2000 has been out for quite a long time, most compatibility issues have been resolved.
Main advantage is its stability. It really hardly crashes.
It will require more RAM to run. You should have at least 128MB of RAM. Otherwise although it will still run, you will find it slow.