This is from Joel Spolsky's Strategy Letter II: Chicken and Egg Problems http://www.joelonsoftware.com/articles/fog0000000054.html
So Windows 3.x on Intel 80386s was the first version that could run multiple DOS programs respectably. (Technically, Windows 386 could too, but 80386s were rare and expensive until about the time that Windows 3.0 came out.) Windows 3.0 was the first version that could actually do a reasonable job running all your old software.
Windows 95? No problem. Nice new 32 bit API, but it still ran old 16 bit software perfectly. Microsoft obsessed about this, spending a big chunk of change testing every old program they could find with Windows 95. Jon Ross, who wrote the original version of SimCity for Windows 3.x, told me that he accidentally left a bug in SimCity where he read memory that he had just freed. Yep. It worked fine on Windows 3.x, because the memory never went anywhere. Here's the amazing part: On beta versions of Windows 95, SimCity wasn't working in testing. Microsoft tracked down the bug and added specific code to Windows 95 that looks for SimCity. If it finds SimCity running, it runs the memory allocator in a special mode that doesn't free memory right away. That's the kind of obsession with backward compatibility that made people willing to upgrade to Windows 95.