I've done this before, run The Puppy on the netbook. It amazes me how fast it boots from a usb drive and how fine it runs. The netbook comes with Ubuntu Netbook Remix installed, but it's always more fun to run other things just for the hell of it.
All images are clickable for greater inspection. Select "all sizes" upon landing on the flickr page.
Image #1: Screenshot of JVM window manager. Pretty! Wallpaper from visualparadox.com. Go ahead, click it, inspect it closely! Breathe deeply.
Image #3: The Puppy lives here on a usb flash drive. Take a cheap-o flash drive, make it bootable, install the Puppy to it, and boot 'er up! Your session will get saved back to the usb drive each time, never touching the netbook hard drive. The flash drive can be formatted as "vfat", or why not be groovy and go for "ext3" or something.