Paul O'Brien has used vLite to lighten Microsoft Vista enough to fit into an Asus Eee PC. He took a few things off, used a 8GB Secure Digital card for storage and got it working, running simple tasks at an acceptable speed. But why anyone would like to install a system that wasn't designed for this machine, just to run Firefox or Thunderbird slower than under Linux? Well, probably just because he can. [MoDaCo via Wired]
There are options to drop the size of the different bars and icons, although I don't think he reduced the icon size nearly as much as he should have.
With a base Vista Business install falling under ~9 gigabytes with system restore turned off, it's not horrifying to get it on a 8 gigabyte drive. With a good solution for WinSXS, you could probably get the install down to ~4 gigabytes, but you'd have to really know what you're doing; that folder's basically a giant backup and backwards compatibility file.