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Look at fluxbox, XFCE, etc. for examples of open source GUIs/wms that are lightweight and fast. I guarantee you, if you setup a Linux machine with just fluxbox, firefox, gaim, thunderbird, and whatever other apps you needed, not only would it fit in 1GB, but it'd be much faster and better than your old stuff.
Linux/OSS is about choice. That said, I do agree with SOMETHING this author has to say.
OpenOffice.org is, in my opinion, a good replacement for MS Office, but it definitely isn't innovative. He's perfectly right to point that out. AbiWord is a beautifully done word processor, but even that isn't _too_ innovative (though, I have to be honest, when it comes to which Word Processor I prefer, AbiWord is #1). Apple, meanwhile, a pretty closed-source and proprietary company, has at least come out with Pages, which looks like "something else" in the Word Processor arena.
I think one of the nice things about open source software's history is being innovative. For example, say what you will about LaTeX (it's harder to use than a word processor, etc. etc.), but it definitely is an innovative piece of software. With LaTeX, you can typeset beautiful books and articles in a PLAIN TEXT EDITOR and LaTeX does most of the work for you in making layout look good and clean. Want to automatically syntax highlight a section of code in your article? There's a LaTeX package for that, so that all you do is paste the code, and line numbers and syntax highlighting are taken care of.
I recently had to write a 50-page guide documenting how to maintain some pretty complex system I put together for a client, so that another developer could take over my job. And I simply couldn't have produced as beautiful a document, as clear a document, in as short a time without LaTeX. If I had used MS Word or OpenOffice, I would have spent 50% of my time formatting it, and the other 50% actually writing it. With LaTeX, I could focus on the writing.
The other thing about OSS is programs haven't a well-defined interface, which has traditionally been the command-line. One thing I notice that others notice too is that with the rise of the "Linux desktop", this well-defined interface is disappearing. It's hard to attach two GUI programs to each other via a "pipe" or something like it. Some developers expose the interface (for example, Evolution's new eplugins framework is a good effort), and that's a good step, but I think to be innovative we really need to start rethinking how to make different GUI applications work together in the same way old-style UNIX command line tools used do.
Once that happens, then the UNIX desktop (GNOME/KDE or whatever) can finally be _scriptable_, and then some more innovation can happen when developers find out clever ways of combining two or more desktop applications.