First of all, thanks Qole! You've made me fall in love with my n800 all over again. This is what the tablets should have been out of the box!
A couple of comments:

1)For anyone questioning the speed, I have a fairly recent Tabletkiosk UMPC running Vista, Debian on the n800 blows it out of the water. I've cleaned out my Hildon stuff and leave LXDE running all the time.

2)As regards running out of room in the image file, I've found that running 'deborphan' in a terminal after any changes thru synaptic or apt can produce a significant list of unneeded libs that can be removed. After customizing to suit my needs, this allowed me to remove ~50mb more. Also, as much as I love the Gimp, mtpaint saves you ~45mb more space, works faster and uses the screen realestate better, and has most of the functionality of the Gimp.