Damn Small Linux is a very versatile 50MB mini desktop-oriented Linux distribution.
Damn Small is small enough and smart enough to do the following things:
Boot from a business card CD as a live Linux distribution (LiveCD)
Boot from a USB pen drive
Boot from within a host operating system (that's right, it can run *inside* Windows)
Run very nicely from an IDE Compact Flash drive via a method we call "frugal install."
Transform into a Debian OS with a traditional hard drive install
Run light enough to power a 486DX with 16MB of Ram
Run fully in RAM with as little as 128MB (you will be amazed at how fast your computer can be!)
Modularly grow -- DSL is highly extendable without the need to customize
DSL was originally developed as an experiment to see how many usable desktop applications can fit inside a 50MB live CD. It was at first just a personal tool/toy. But over time, Damn Small Linux grew into a community project with thousands of development hours put into refinements, including a fully automated remote and local application installation system and a very versatile backup and restore system which may be used with any writable media, including a USB device, floppy disk, or a hard drive.
DSL has a nearly complete desktop and a tiny core of command-line tools. All applications have been chosen for the best balance of functionality, size, and speed. Damn Small also has the ability to act as an SSH/FTP/HTTPD server right off of a live CD. In our quest to save space and have a fully functional desktop, we've made many GUI administration tools that are fast yet still easy to use.
Damn Small Linux hasn't been updated in some time, but it's a fun place to start if you've never tried Linux.