Excellent.
The best way to get a lean system is to just download a netinstall CD and install a base system (no X). Then
aptitude install X and everything else on top of that. If you want a "lighter" gnome or kde, just install kde-core or gnome-core instead. It leaves off all the fluff.
On RAM limited hardware, you can increase the speed by using a lightweight window manager like windowmaker, icewm, etc instead of KDE or Gnome. But my old box 400MHz, 256MB Ram can run KDE better than it ever ran Win98.
You can also increase the speed on old machines by recompiling the kernel to cut out things you don't need.