i done a lot of home networking and data xfer stuff and i'd say yer best bet is to open the case, jumper the old as primary slave and then copy directly. i've had good experiences w/ winxp and doing that.
another thing u can do is the cdr, but wasting a cd on dated info sucks for 2 reasons- 1) the data could be important and then when yer done u have to destroy the cd, not just chuck it, and 2) then u gotta keep a stupid cd around w/ dated material (i have over 700 cds in my room right now...jesus christ is it annoying. thats in addition to my 248 gb of hd space).
another thing u can do which is highly recommendable would be to network the comps. if u have a crossover cable or a network hub, that works best, altho remember to put them on the same network domain, and also dont forget that win98 can't read any ntfs partition, but that just means u set the files shared on the win98 machine and then on yer xp box, u access/copy the files. a while ago i thought it would be a good idea to get a usb pc/pc connection cable but that is 100% useless. i have yet to see it work on any computer, and crossover cables do the same thing, and are rediculously faster.
that's about it. any questions, just respond.