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Hmm... I love Ubuntu. I use Ubuntu. But lightweight it ain't. Sadly, just slapping Xfce as a manager on top of it doesn't help that much. It could, but the GNOMEy underbelly is still there, along with a butt load of services and other helpful but resource hungry cruft.
For Ubuntu, probably the most nimble is http://crunchbanglinux.org/. Also starting with an Ubuntu server install and only adding what you want works. To take that as far as you can, there's JeOS. Honestly, installing plain old Debian will get you less resource use.
Many tiny LiveCDs work well on older boxen. DamnSmall works well. Slax is good.
Mandriva behaves well on small systems. Xandros was used on the EEE. Any distro that uses LXDE is probably on the right track for small.
I'm quite fond of Arch. Not for the timid, but probably the fastest you'll find outside of a pure source distro.
@Baavgai & Tom9729 - Thank you both for the advice.
I downloaded Puppy Linux, and Looked into Damn Small.
I am going to play around with different distros for a bit and see what would be the easiest to throw at a 9 & 14 year old who doesn't have much knowledge of computers past opening firefox and screwing around online. Maybe this will help spark there curiosity a little more also.