The battery indicator is not 100% accurate. If it won't charge past "98%" then it's likely at full charge - the iPhone battery system stops charging once the battery reaches full charge. You can try to reset the battery indicator to say 100% by letting the battery run down 'til "0," then fully recharge the battery (don't use the phone while it's recharging).
a "hard reset" is like rebooting a computer. Settings and the contents of memory are not affected. It's a fix for a variety of ills, though I can't say re-calibrating the battery indicator is likely to be one of them.
Battery indicators are approximate measures at best. They're useful for telling you when it's a good idea to recharge, but not very helpful at measuring how fast you'll run out of battery. Even a battery near the end of its life will charge to 100% - what changes is how long it lasts after being fully charged.
More important than worrying about what the indicator says is looking at how your iPhone uses power. All sorts of settings and usage patterns can affect battery life. There are probably a half-dozen things you can do (mostly by adjusting settings) to get way more than an extra 2% life out of the battery.
http://www.apple.com/batteries/iphone.html