I wasn't surprised when I couldn't upgrade from my PC; it's got so many non-standard drivers and workarounds that it's a wonder I keep it running at all. I was more surprised when I upgraded from a vanilla install of Win98 and after an otherwise smooth install I found it had lost my video drivers, forcing me to spend all my time in 16 color, 640x480 mode. My story deadline arrived before Microsoft came up with a solution.
Other reviews of Windows ME have spent so much time discussing the difficulties in upgrading a PC from Windows 98 that to detail my own experiences at length would be redundant. When you install it, just choose the option to do a complete backup of your current system, and if it doesn't work go to add/remove programs in the control panel and find the "Uninstall Windows ME" entry. Then phone up Microsoft and yell at them.