Ok so what i'm trying to get at here is....
my grandmothers computer is fast enouhg to run Xp, but she thinks that 98 will do everything she needs just fine even though windows 98 is buggy (blue screen of death, unnavoidable lockups, etc..) would xp be appropriate or is windows 98 ok?
if she doesnt actually have any problems, i say dont mess with it... old people have problems with change.
You could always switch to classic start menu and looks and turn off the left side of explorer then you can add back the missing icons to the desktop with tweakui and she wouldn't know much of the difference after upgrading I don't think.
Just don't go crazy with themes or such things.
have her get a mac 
My grannie has an old G3 that was running os9 for the longest time, i finialy about 2 months ago managed to get her to switch to osX, shes estatic about it now.
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