You can copy the install parts of the Win98 CD to your HD first. It would be the directory with all the “CAB” files. (And copy all of them.) Some versions of Win9x will only install from CD, etc., but there are ways around that which we can help you with if you run into problems.
You don’t actually need to format the HD. Just erase all the files and directories you don’t need for the new install. (E.g., the “WINDOWS” and “PROGRAM FILES” directories, if there are no data files you want to keep below those.)
The really tricky part is to make sure you have all the driver files from the laptop maker’s web site on the HD and unpacked. During the new install, you will be asked where the drivers are. (If no new drivers are available, you can use the ones from your Win95 setup, but there is increased chance of problems.)
Note that Win98 is a bigger hog than Win95. How underpowered is your laptop in terms of processor speed and memory? For a 100Mhz Pentium with 16M, it’s best to just run Win95.