Some great recommendations - here's mine and it's FREE Open Source!
Puppy Linux. http://www.puppylinux.org/home/overview
Overview:
# Small size, around 93MB! This lends itself to some very useful and unique features;
# 'Live' booting from CDs, DVDs, USB flash drives, and other portable media.
# Ability to run entirely from RAM, making it unusually fast and particularly relevant to modern PCs with solid state CF drives as used in Netbooks
# Very low minimum system requirements
# Boot times, well under a minute
# Usability and Compatibility
# Complete range of applications: wordprocessors, spreadsheets, internet browsers, games and image editors. Extra software in the form of dotpets and dotpups. There is a Puppy Software Installer included
# Puppy is easy to use and little technical knowledge is assumed. Hardware is automatically detected. You will often find, whereas on other operating systems you had to install extra driver software to get your particular device functioning, Puppy will succesfully detect and install the driver without prompting.