Netbooks are alright for day to day stuff. Like web surfing, emails, wordprocessing and light movie watching. I wouldn't trust Atom processors to do much more, even when coupled with say an Ion GPU. If you can afford it then go upto something like a Notebook sized system, they don't cost much more for a cheap and cheerful one.
As for a Linux distro for one then these are ones I have tried on my brothers Netbook. He was wanting something easy to use, would run well and be secure.
The new Fedora has had a nice update. Gnome 3 looks nice on a small screen and seems to suit the size well in terms of use of the space. Gnome 3 seems rather user friendly and has some nice inbuilt features. It certainly feels nice for a newcomer to Linux. The only issue I had was with some of the drivers to do with the graphics card. Other than that it seemed nice.
Ubuntu 11.4 has brought the Unity desktop to users. It looks a bit like Gnome 3. However it is still buggy. I had issues with the auto hide feature of the left bar. However it can be dropped down to the previous version of Gnome that they were using. No issues with drivers at all and felt incredibly user friendly. The synaptic package manager is easy to use, as is the new package manager they have made. It has to be said that Unity does not look as nice as Gnome 3 on the smaller screens of netbooks.
Linux Mint was the final one I tried. Its very lite and pretty snappy to use. However I don't like KDE as a desktop and I didn't think it looked nice on a small screen. I didn't really try all the features on this one because I had issues getting it to work with the network card. But try it and see what you think.
I would seriously reccomend trying a few different distros out before you settle on one. If you have a spare USB memory stick you can make live trials on it, instructions can be found on the various distro sites. Depending on how "hardcore" you want to go will determin which distro's to go for.
Hope this helps.
