Yes, they replace operating systems even when they don't need to be replaced. Though it doesn't say much because Vista and the older operating systems will not blow up if you don't update with newer os's. I don't know most software I think will work with Vista 32-bit now. Though the 64-bit programs are harder to find for Vista 64-bit. I have used 98, XP, and now this. XP was a lot better than Windows 98.
I think Vista Premium isn't bad, I don't notice too many differences other than when playing games and it operates smoother I think. The Sims 2 works much better and I have loads of downloads for that (over 3 gigs) and I am just using the graphics card that came with the computer and it works much better. It's only an onboard graphics card but it plays the Sims 2 much better than my old computer did.
I wouldn't upgrade my os because you don't know how it is going to work. I have an hp computer. It's an hp pavilion a6500f and it runs really well. I have much more on this computer than I had on my old one, a bigger hard drive and everything, 8 times the memory. I would have never tried to upgrade my old computer. My old computer was only upgradeable to 2 gigs and it only had 512 mb. I might have gotten away with Vista basic, but it was like over 4 years old, got it in Feb. 2004.