CPU: I think P4 Northwood, Athlon XP is the limit for Windows 98.
Athlon64 or very late P4 (3.2 GHz and above) are "usable", but I don't see the point in using such a system, at that point Windows XP is a much better choice, any game/application that can run only under 98, not under XP will not require that much processing power.
Anything newer is clearly overkill, Win98 doesn't support more than one cpu(core).
Video: GF3/GF4, maybe FX5950 Ultra. Or Radeon 8500/9700, maybe 9800XPro or XT. More than that is overkill, in my opinion.
RAM: 512 is the limit, can be patched to support 1 GB, but again, at that point Windows XP is a better choice.
A great Windows 98 machine: PIII 1000, 512 MB, Geforce4 Ti4600, V2 SLI. It should run almost anything from 1992 to 2002.
If you want older (than 1992) games, then you should go pure MSDOS and much older hardware.
Newer (than 2002) games, go Windows XP and better hardware.