I've got an 8 yr old Toshiba Satellite Pro 4600; it's got a 700mhz processor, and 256mb RAM. I installed Debian Lenny using the XFCE desktop environment and it works like a charm. Learning Linux is a pain, but there's a point when you realise that there is a vast repository of experience and knowledge on the 'net, and after a bit of effort to get it all setup, the result is a rock-solid, nicely performing laptop that frees up the Shared PC that the Missus likes to use as a media centre.
The only downside is the Flash API for Linux requires about 1Ghz of CPU grunt, so youtube is pretty choppy. Everything else is great.
The alternative (I tried it) was Win2k SP4; with suitable antivirus and firewall protection - unfortunately these are rather resource-heavy these days, and left little RAM overhead, to the extent that the laptop didn't run well at all.
It's definitely worth considering if you've got old kit that you want to breathe new life into. It's worth thinking about what you use them for; if it's basic stuff, definitely consider alternative operating systems.