Ethernet is always better than USB for connecting to a DSL or cable modem, but this may not be the cause of the problem. Is it always 9:00:00 PM that this happens, or is it "around" 9 PM?. maybe Granny always calls her pal around 9 and the phone line is getting affected. Check that you have the modem plugged in with the right filters and to a phone outlet as near as possible to where the phone line enters the house. Review what extension phones etc are plugged in. Maybe you need to ask your phone line provider a few questions. Your PC is very heavily under specced and Windows 98 is notorious for bad USB support, so try upgrading the drivers, or better, try ethernet. The netzero website should have a guide for setting this up, or you may have a CD-ROM supplied by them.
Just a thought - maybe you are hitting some kind of service limit?