I tried Tiny XP rev 9 just to save the trouble of the NLite process, but it's getting replaced with my legal copy of XP home from my old PC this weekend. It just doesn't work right - at least not for me. It was supposed to install WiMP, IE7 (needed only for Windows Update), etc, but didn't install any of it. It also cut out "unnecessary" stuff like the volume control and all the options for customizing the start menu.
Thanks but no thanks. I'd rather spend more flash space on a bit more functionality.
BTW - I have the model with the slower Flash drive, but XP still runs OK (with the usual tweaks - 1.5G RAM upgrade, virtual memory turned off, indexing off, etc). I suspect people complaining about occasional lags have a driver problem or something that's being reported with an event log entry over and over.