I'll answer your questions one at a time for simplicity:
"Is linux faster than Windows... say 98se or XP?"
Your question is more complicated than it seems. Windows is is more or less the way it is; there is very little flexibility, so its speed is determined by the raw power of the system on which it runs. Linux is a very modular operating system, so a large portion of its components are optional. As a result, it can be fine tuned, scaled down to run on very poor hardware, or scaled up to run on a 64-processor, 64GB-RAM behemoth. In other words, Linux
can certainly be faster and generally perform better than any version of Windows, and it
can be slower as well, depending on how it's configured. Most mainstream Linux distributions perform about the same as Windows in terms of GUI responsiveness right out of the box, but it doesn't take much work to get more performance out of them. All versions of Linux, in any configuration, multi-task much better than Windows.
"Can windows programs run on Linux?"
Yes and no. Linux is a very different system, so Windows software is written quite differently than Linux software. They are not compatible by default, unless specificly written in a cross-platform API, like JAVA or python. With WINE however, an API compatibility layer is provided to make programs 'think' they're running on Windows. This works with varying levels of success. Some programs work perfectly, some barely, some not at all. Cedega is a commercial version of WINE which specifically provides compatibility for games. Check out their massive
supported game library. Still, the best way to run programs in Linux is when they're written for Linux in the first place. This isn't much of a problem though, because for instance Mandrake alone ships with 2,000 individual programs included!
"Is there as much a variety of programs as Windows on Linux?(like many different programs?)"
Like I mentioned above, there are
tons. Not as many as on Windows, but a surprising amount. There are programs for every purpose, including games, multimedia and office software. And many programs you may be used to in Windows, like Mozilla Firefox, have Linux versions also. Until recently, the only program that existed in Windows that Linux had no equivilent for was Outlook's built-in network calendering software. Now though, the folks at Mozilla.org are working on Mozilla Sunbird, an open-source, cross-platform calendering program. There are also various other programs along these lines, such as KDE's 'Kontact'.
"And if Linux is good and as easy to use as windows, why isn't it bundled with the computer systems on store shelves?"
Another deceptively complicated question, but a good one. Most hardware vendors, for instance HP and Dell, have very restricive business deals which prohibit them from pre-installing Linux on their hardware. If they work closely with MS, they get the carrot (hint: $$$). If they install a competitor's OS on their hardware, they get the stick (no soup for you!). However, some larger companies realize that there is a profit to be made on Linux also, so they are beginning to sell Linux-preinstalled PCs and laptops. For instance, Wallmart and HP both have inexpensive Linux PCs and Laptops for sale now. And Dell is making tons of money from selling servers with Linux preinstalled.