99.7% equates to 5 minutes of downtime every single day, or 2.5 hours of downtime in a given month. 98% is 30 minutes of downtime per day. That's completely unacceptable, IMO. Even 99.9% is almost 45 minutes of downtime in a given month.
As a host, 99.95% is a good, realistic number to shoot for. That allows for about 22 minutes of downtime per month (or 4 1/2 hours over the year). That's more than enough for any reboots after updates (if you aren't using Ksplice), or any unexpected maintenance that might need to occur...hard drive replacement, RAM replacement, upgrades, etc. If you have some catastrophic network or server failure, the uptime might be lower than that, but how often do you really have those types of failures?