What version of Windows 98 are you using? The early version does not support USB - neither does Win NT4. You need to use Win 98SE, Win2k or XP. Linux kernel 2.4 and on supports USB Flash drives too.
That said, I have one flash drive that will not work with one of my PCs, but does work on 4 other desktops/laptops that I have tried it with. The recalcitrant PC, which supports both USB 1.1 and 2, does read 3 other flash drives perfectly!