I would disagree that 98 was the last significant OS...XP was a major step because it finally brought an NT OS down to the consumer level. 2000 came close, but it wasn't positioned as a consumer OS.
However, I do see things happening especially in the Office market. I myself (due in part to some unforseen discoveries which would've meant me spending $500-600 to stick with MS Office, but I won't get into that here) have gone to using OpenOffice.org on the main PCs in our home (my Dad's laptop came with Office XP) and it has been very good for us. I have not noticed any significant lacking (after using Office 2000 for prolly 2-3 years). My hopes are not too high for Office System 2003, and several OEM's are shipping WordPerfect instead of MS Works, and one cannot help but wonder if some might start selling WordPerfect (or OpenOffice?) instead of MS Office. That is certainly something to keep an eye on.
Going back to Windoze, I have never used Linux really (although only my current ISP which is MSN is keeping me from doing that), but I doubt that it is anywhere near a spot to take any significant ground from Windows. What is perhaps one of the most radical possibilities of a non-Windows OS for the PC concerns Apple. This is a huge what if, but what if Apple decided to ship some PC's with Intel or AMD CPU's? Apple would need to develop an x86 version of MacOS X, which could then, if they would make it be so, be a competitor to Windows on non-Apple PC's. Who knows if it will happen.
There's no doubt about it that I am not a MS fan anymore. I may have used to be, but their licensing terms and the price of their products is just too high. I honestly doubt that my main PC (because I only web surf, and do office work) will ever recieve a newer version of Windows (My family just spent $200 earlier this year to buy a Full Retail Windows XP Professional). If anything, it would recieve Linux with OpenOffice.