NT was intended a business OS yes, but that still didn't mean that most businesses actually ran it on the average workstation. In my experience, most business computers ran 98 at the time.
The real reason why Joe off the street hasn't upgraded is that they don't care enough to spend the time or money to upgrade. Those who want to upgrade but haven't, have held back because of compatibility.
I agree 98 should be put to rest, and most people like XP, it certainly doesn't have the bad name ME has - most people praise it, sugarman is in the vast minority.
As for sugarman, if half your machines can't run XP properly, you should either
a) stop buying those $299 machines or
b) pay someone who knows how to do a virus scan/spyware cleaning/driver update.