I have a load of USB 2.0 and 1.1 printers, hard disks, pen drives, keyboards etc etc and the USB 2.0 external stuff all works perfectly OK with USB 1.1 ports on XP with no extra drivers and with suitable drivers on 98SE.
I use a USB 2.0 external hard disk as a backup device on a range of PC's with 98SE and XP, some with USB 1.1 and some with USB 2.0 ports, it all works fine other than it's sloooooooow with 1.1.