One of the linux distributions optimal for a netbook is debian squeeze. When starting and logging in to gnome, debian hardly uses 85MB RAM (95 MB RAM with swap)! Even when firefox is running, it did not cross 150 MB RAM
RAM usage on startup without enabling swap was lesser than 90 MB
RAM usage after swap enabling
RAM usage when running firefox
After trying various distributions for almost an year, debian squeeze feels the optimal linux distribution for this netbook (Ideapad S10). All applications launch very fast and gives a feel it is running on a core2.
It is hard to install debian testing on to a netbook with wireless, but it is worth the effort.