Bumping up the RAM does not always make any difference.
If your system only ever uses 600mb of ram, then its pointless having 2GB's of it.
I ran XP with no issues on an old laptop by todays standards, with as fast a front side bus as is on the netbooks, but with just 512 of ram, why is it that these netbooks seem to do so bad with performance when my equal spec P3 machine didnt. As all specs are very similar.
In XP you can speed it up by getting rid of some visual enhancements, its in control panel, systems, and then one of the tabs, then performance.
You can try to set the visual settings to best performance, and then disable any services that you deem you dont need.
Disable any statup programs that are not needed, ensure you have the latest driver, ensure your anti-virus is not a resource hog.
I bet you could pull a few things off google for optimizing windows xp, using optimizing as optimiseing is an English term and thus you'll be better with the american way of spelling it.
I think you can do something with the pagefile too?
Or you can just see what you need on a laptop/pc, and see if linux offers all you need, and if so, install linux.
If you need ITunes i am sure you can run that via Wine on Linux.
If i was to get a netbook i would opt for the IBM, i mean Lenovo offering, the same spec, but they have a small OS that runs along XP that can be used for the net/etc that takes seconds to boot into.