The pre-installed OS is pretty good for most things, but I find it is a bit limiting for real work. Xandros comes with KDE 3.4.2, so installing any newer KDE based apps is tricky, since that will force the upgrade of the kdelibs and could break stuff.
The other reason why the default OS is not appealing to me is that there is a 2.3GB read only partition for the OS files and pre-installed programs. So you only have 1.4GB for your user files on the built-in drive. That wouldn’t really be such a big problem if you could free up some space, however even if you uninstall apps you don’t use, you can’t actually use any of that freed space because no data gets removed from the system partition. And if you install new apps it uses space on your user partition.
So that’s a no go. I installed plain debian on my EeePC and it works really nicely. All the apps I need (Firefox, Openoffice, Kopete, Konversation, KDevelop, , plus a full Qt/C++ development enviroment fits into 1.5GB so I have more functionality in much less space and much more flexibility. Got an extra 4GB SD card so I might put Windows on that (although windows is a bitch to install on removable storage).
Overall the EeePC is really awesome.. Even though it has a small screen, I find I’m using my main laptop less and less at home. There’s a huge benefit to having something you can easily carry around with one hand, has no moving parts, and can use in any place, and boots up super fast.