I myself took the leap yesterday.
I had originally installed Win ME over Win 95. It wasn't a good idea and the result had been a mix of both Operating systems.
So yesterday, I backed up all my data including emails and drivers etc to CD-ROM, printed out the instructions from Flex's link above and also from my link about saving/restoring Outlook Express files.
I then proceeded with the reformat and re-install.
The only problems I had were the following:
1) Windoze didn't seem to recognise my sound card and didn't load the correct driver or let me install the specific driver from disk. - I was later able to 'remove' this driver (via control panel > system) and re-install after a reboot following the install.
2) I forgot to backup my internet favourites (damn)
3) The backup of my Outlook Express address didn't work. Luckily the backup of my emails did work, so I should be able to rebuild it ok.
Conclusion
I now have a clean install of Win ME and clean install of my applics, drivers and data, instead of hybrid Win ME / 95 install and it has made a big difference. - After bootup, I now have 89 % system resources available compared to 83 % before and the system is noticeably quicker and definitely more stable.
It still annoys me though that this procedure is necessary on such a regular basis..... Comments ?