I've been running Xubuntu 8.1 on a 700 Mhz P3 COMPAQ ENPRO computer with 512 MB of RAM. This system originally had Windows 2000 on it and it ran fairly well if a little slow. I've tried Debian 4.0 on it and wasn't really impressed. With an earlier version of Ubuntu it was a little more lively. Xubuntu and a P3 is a good combination, especially with the xfce desktop. This system has a 20 GB HDD and a CDRW drive. The OS installation began as a Live CDROM install. In this system a DVD player/writer would not be a happy choice. I have used it for light-duty tasks that do not require much CPU cycle time.
Overall the desktop is responsive. The usual desktop applications work fairly well. There are 2 default desktops compared to the typical 4 in other Linux distributions. It can be set for 4 if desired but performance might suffer on older or slower CPUs. The admin tools typically found on Ubuntu and Debian Gnome desktops are installed.
There is a render issue with the desktop and it might be a compatibility issue with the X driver. There are a number of fonts when using Open Office that just do not look very good on the screen. Display resolution of the Intel chip-set as well might be at fault since 1024 x 768 seems to look the best but the funky fonts still do not render well. Web pages seem to come out looking as expected. I have run Xubuntu at work in VMWare Workstation and it looks and works well so the issue might be the driver.
OpenOffice 2.4 is one of the applications I use often. The only thing noticeably odd is that a lot of contractions always seem to come up tagged as errors. I typically use OO to write my blogs before uploading them. If there is a setting I'm missing I haven't found it yet. I suspect a dictionary issue.
Firefox 3.0.5 came as an update to the version on the distribution. I installed a number of plug-ins and extensions and everything seems to run error free even though the CPU is fairly slow. In many ways this system is much like the new Intel Atom systems at least in feature set and speed. So Xubuntu might be a OS solution for the Atom netbooks.
The version of Synaptic and apt work very well. I was able to remove the packages that it seems every Linux system configuration guru thinks everybody wants. For instance, Bluetooth and Bit Torrent are NOT packages I want on any computer, Linux, BSD or Windows. They removed easily.
The applications button and sub-menus of the xfce desktop is more intelligently laid out compared to the same in a Debian Gnome desktop.
On this P3, Xubuntu is going to stay the OS of choice.