Somewhat longer answer: the amount of RAM is a major issue here. If you want to install a distro with "full-blown desktop environment" using a live CD (Ubuntu, Mandriva, PCLos), you'll need MORE THAN 256MB. I've run Ubuntu on a 733-PIII with 384MB of RAM... a rocket it ain't, but it works. Works fine, actually. However: using something a bit faster (Xubuntu, Zenwalk, Vector Linux) might make sense; Zenwalk and Vector come with "text-based-install-only" CDs good for systems with less than 128MB of RAM, even.
EDIT: The Xfce desktop environment used in the aforementioned "lighter" distributions is pretty cool, actually. The below screenshot is from PII-266 Compaq Armada 1700 lappy with whopping 96MB of RAM... talk about modest specs: