I am running Xubuntu on a laptop with 128MB of RAM memory...
It runs great.... the only thing i miss is a nice signal strenght indicator for my network connection that is installed with the GNOME desktop environment. I would always recommand giving xubuntu a try. I have it installed after i installed the regular GNOME Ubuntu, so i can choose to switch sessions. Picasa and other memory consuming apps run fine...

all the best