Windows ME... Tannin has been known to rather aptly refer to it as Morons Edition, I've always thought that it was basically a stop gap. Windows2000 was kind of hyped as being NT for home users (I'm not sure if that was by MS or others), pretty much what XP ended up being. But some features, inevitably, got dropped and others (like DirectX) delayed so that at launch it wasn't something MS wanted to sell to consumers (It was stable and had few useless features how does one sell that?). AFAIK ME was a hack job patch to 98 to make people think that they had the new OS they'd been promised. 2000/Millennium, sounded similar, the target audience wouldn't know the difference. I came across a lot of people who sure didn't.
In another theory ME was Microsoft's way of maintaining the law of preservation of stability, if 2000 meant that some home users were going to have improved system stability then a force was needed to offset that - Windows ME.
Of course all of this is based largely on my personal impressions (and some perhaps rather shaky science) rather than fact, and on discussions I've had with people regarding it. But I think that ME was somewhat the dung-beetle of operating systems, more reviled than actually studied, at least amongst my peers, so you might find somewhere like Wikipedia to be a more authoritative source.
