A penultimate version is the second last one - and Microsoft's penultimate operating systems have generally been their best ones.
There was an MS-DOS 4.0 - but it's 3.2 that everyone remembers as the best of the MS-DOS versions.
Windows 4.0 was released to test users and withdrawn, (see The Amazing Windows 4.0 for a satirical review) ultimately to be reincarnated as the first Windows CE releases, largely because most existing customer machines simply couldn't boot the thing.
The penultimate version, however, Windows 3.11, was a big hit and reasonably stable by Microsoft standards.
Windows ME was a disaster - bloated, unstable, and generally disliked even by PC industry reviewers.
Windows 98, however, was such a success that even today I get web hits from people running it.
I suspect that history will see Windows Vista as another ultimate product, with the penultimate Windows 2003/XP as the long term Microsoft standard bearer.
So why?
Look at the history: Microsoft buys or copies something: makes a commercially successful version, starts an internal adaptation and redesign project that becomes a long running feud between deeply committed internal bureaucrats, and when one side gets out a winner staffing change ultimately leaves the losers at bat - and bang, an ultimate product that eventually fails of its own weight.