Upgrading to WinME from Win98 or SE is no different than any previous upgrade IMHO. It is accompanied by the same problems as have been described here.
For what it's worth, as with the predecessors, I'd strongly suggest doing a clean install if you have little to lose or plenty of time & patience.
As a trial I did the clean install on a freshly formatted HD, and everything went without a flaw. The OS works very well and is fast, intuitive etc etc.
I then decided to make use of the Home Networking wizard, connecting the secondary PC (WinME) to the primary one (Win98SE) which is chock full of all the hardware, including the braodband internet connection. This involved installing additional LAN cards in each PC, but so far no joy. Everything seems set up but the systems will just not find each other
Delving in to the help files, it's strongly suggested that the host PC is running WinME, so being a trusting soul, I upgraded...
Since then, I have slow boots, shutdown problems and hardware not being found or extra stuff I don't have being found...e.g. 3 additional COM ports ! My biggest gripe is that of all the software on the PC, IE has the biggest problems (including after upgrade to 5.5), with constant crashes involving that perennial nightmare kernel32.dll !
One good feature I have to say is that if you run setup.exe of WinME, it will scrutinise your system and software (registry) and warn you of any incompatibilities. I followed the advice to uninstall a program and update one set of drivers, and the instal went off smoothly.
Long winded and I apologise, but at the end of the day, it's an individual choice. I would definitely suggest a clean install, as although it could be a life saver, I don't place all that much faith in the system restore feature.
Good luck