Win98 or Win2k for reload on Thinkpad

I have an IBM Thinkpad, iSeries, type 2621 w/ 64mg ram, Intel celeron processor, a single partitioned hard drive w/ 5.5 gig total capacity.
Due to performance and error messages, I want to reformat the drive and reload Windows, etc.
I have install disks for Win98 and Win2k, and also the Thinkpad Recovery and Optimization disks.
Once formatted, what is the reload sequence to insure that all the Thinkpad features still work? Also, how can I unpartion the drive, or is there a good reason to leave it partioned? Which OS is the better option, Win98 or Win2k? Thanks for your help!