I have a similar laptop: 32-bit, 1Gb RAM, 1.6Ghz atom, purchased years ago on the cheap. I run the latest Ubuntu desktop edition and am able to run everything that I need (mostly Rails + remote services over SSH tunnels). I can even stream Hulu, though the video does sometimes lag.
I don't have personal experience with any other distros, but a friend of mine has an equally antiquated laptop running the latest Fedora which he claims is better than an abacus. YMMV.
I don't have personal experience with any other distros, but a friend of mine has an equally antiquated laptop running the latest Fedora which he claims is better than an abacus. YMMV.