Your friends are all running Windows XP and you are still using that clunky old Windows 98 or worse even... Windows Me. You don't want to lay out the cash for a new PC, but you have a bad case of operating system envy. Upgrading to Windows XP may be an option for you.
Of course you need a new enough computer to run Windows XP. The Microsoft web site recommends at least a 300MHz processor, 128MB RAM and 1.5 gigabytes of free hard disk space. I personally recommend at least a 450MHz processor. As far as the memory is concerned, 128MB is okay, but may feel sluggish at times. Windows XP runs a lot smoother if you have 256MB. If you are not sure what you have, there is a cool utility that can show you. Go to the PreactiveIT.com web site, click free utilities, then download and run the Belarc Advisor. If it turns out that you need a memory upgrade, you can likely do it yourself for about $50 to $75.
If you are running Windows 98, Windows 98 SE or Windows Me, you can purchase "Windows XP Home Edition - Upgrade" for $99.99 at CompUSA, Best Buy or Circuit City. There are two options for installation. One is to put in the CD and click upgrade. This is convenient because all if your applications will still be installed and everything will pretty much be as you had it before. The second option is the one I prefer because it is cleaner. You backup your data, then wipe the drive clean and do a fresh installation. This requires you to reinstall all of your applications and reload your data though. It can take several hours and if you are not a computer guy by trade, you may require some professional assistance.
Either way you choose to upgrade, Windows XP can breathe a breath of fresh air into an old computer. It is certainly more functional and fun than the older versions of Windows.