Harddisk technology is evolving rapidly, so a newer harddrive may considerably speed up your system. Raw processor speed is not nearly as important to overall system performance as is often suggested. It is dependent on a lot of factors, like memory, cache, harddisk, bus speed, the software you use, etc. Fast processors are mostly very expensive, and often require other parts in your system to be replaced as well. You should only consider this as a last resort.
Technology is evolving rapidly, prices seem to be dropping ever faster.
Keeping up with the latest standards will cost you a lot of money. If you can suffice with the 'previous standards', you'll save yourself a bundle. Replacing only outdated parts in your computer often seems a wiser approach, than simply buying a new system. Some final remarks on Windows 98. The newest incarnation of Microsoft's brainchild gives some things to consider.