windows 95 is for 486, pentium and pentium mmx
windows 98se is for pentium 2/3
windows 2000 for powerful pentium 3 or athlon xp
windows xp for everything else

at least that's what i think
the benefits of windows xp over its predecessors are better and newer driver support, stability, more software and hardware available, supports easily up to 3.5 gb of ram (limit depending on hardware installed) and supports more than just one core/thread in processors.

windows 2000 has many of these things, but nowadays is starting to lack some software support, most notably steam support out of the box, and also driver support for some better cards is reduced or nonexistant.

windows me, configured correctly works really good, and if you plan to run windows games (no dos) on that machine, is a solid performer. the thing is that you need to use the latest drivers, using vxd drivers or older wdm drivers will cause it to fail. using it with more than 1.5gb of ram will fail.

windows 98se is the perfect option if you want a 9x machine with usb AND DOS support, without dos i recommend ME, it has good support for hardware and software from it's era. more than 768mb of ram (without tricks) and the system will fail to boot.

windows 95 (i always use osr2.5 and don't install ie4) is perfect for pentium/586/486 machines that mostly run dos games, i recommend it over dos based file managers because it's easier to use and set up (at least from my perspective). i also recommend it when you need to use ethernet cards for file sharing and such. it makes life easier than using wfw 3.11 or lan manager in dos.