Windows 98 Setup

• Much more clever use of the 256 color mode. Because Windows could only assume so much about your display adapter at launch time, a default VGA driver was used. However, for Windows 98, Microsoft went with a high-contrast scheme to make this difference seem much less.
• Windows 98 had an approximate time-remaining counter on the installation. This was extremely helpful to determine how much longer the installation had to go. It could take weeks, months, years, days, who knows with Windows 95. Windows 98 gave you a countdown and a better sense of what was going on. Windows 95 had flashing colors and other ambiguous indicators that made setup less nice than it could have been.
• Windows 98 installation was one pass Windows 95 had a really strange section to it called "Preparing your to run Windows 95 for the first time." Basically, Windows 95 required two boots: one to go through Plug and Play first shot, and then another one to redo the driver database and then launch into Windows. Memphis was a huge step up from that in that it could launch into Windows, figure out what should be happening, and then continue, making life a lot easier for those involved.
• Less campy marketing phrases. Windows 95 was bad, and I have a high level of tolerance for these things. Windows 95 is more fun! Yikes. Windows 98 had toned down the indoctrination a little bit more. There was a Windows 98 "Starts Here" disk on some OEM SKU's, but it was far more rare than on 95(Windows 95 Starts Here came packaged with a lot of OEMs on Windows 95 OSR1)
• Better boot disk. Hands-down, the Windows 98 boot disk is a winner. What made it awesome was that it did many things for you on boot:
  • Nice interactive menu (no config.sys / autoexec.bat fiddling)
  • Three megs of tools on a RAM Disk: This was the only boot disk that allowed you to manipulate the hard drive with only one disk because it unzipped itself to a RAM Disk. Very convenient
  • Auto-detect CD-ROM drivers: MSCDEX was the hardest thing to fiddle with to get to work for old DOS games and the like. With the 98 boot disk, your CD was found and installed automatically.
• Better compatibility: Windows 98 was even more compatible than 95, and thus made installation and detection of most hardware devices a breeze. (Most, but not all)

Thanks to generic-man for updated info on Windows 98 Starts Here