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I got a 2005 3.7 auto Quad cab. I don't do any towing. Around town about 16-18 mpg. When going uphill in the mountains, it is underpowered. Otherwise, I've been happy for 7 years now. As other threads indicate, lot of front suspension problems until you replace them.
If you get a 2008+, the 4.7 will be a slightly better 302 HP unit that also gets a tiny bit better mileage. Winter and 4x4 dropped me down to 14-15 MPG, but in the summer I usually average 16-17 MPG with about 50/50 city/highway driving.
You're probably better off keeping that '98. sounds like you've got it in shape, plus will be a pita for you to re register and change your screen name and all.
I don't mind the 3.7 I've had a 3.7 ram and now a 3.7 Dakota. In the Ram it was way underpowered and I got like 14-15 mpg. I just checked mine on my Dakota last night and got 19.5 with a mix of highway city. I don't race anyone so it's powerful enough for me.