I think that Sherm hit the nail on the head here:
If you still have users running Windows 98, then one obvious drawback to dropping support is that some of those will inevitably refuse to upgrade. They'll either stick with the version of your software they already have, or switch to something else.
I would only add one thing to that -- anybody using Windows 98 probably isn't going to be so keen on upgrading anything. In fact, it's likely that the users you've got out there who are using Win98 are using older versions of your software anyways.
In any case, the advantages for supporting a minimum of WinNT-based Windows are too numerous to list here. The best solution here is to provide a link to the last functioning Win98-compatible version of your software to these users, but you shouldn't go out of your way to cater to people who are still keen on running a 10-year old OS.