I booted from the USB, formatted the existing OS, and loaded Windows 7. Heres directions for installing Windows 7 with a USB drive. And heres where to download Windows 7 RC. I find that most Vista drivers work fine in Windows 7, but I can't guarantee it.
Now for the important part, the software. I'm a .NET developer, and Microsoft offers free versions of all their big Express tools such as SQL Server Express, and Visual Web Developer Express, and Visual C# Express.
These versions come with most of the features that the paid ones do, just not the server licenses and extra tools.
The other day on the WAN party that I host weekly we were discussing how hard it is to become a developer without, at some point, pirating tools. It's expensive and many a college kid doesn't have two dimes to rub together. I know I didn't.
Free editions of expensive software is a great way to attract more kids to the field (as well as keep the pirates at bay) If you develop in another language you can get free tools like Eclipse Eclipse and Netbeans. MySQL is a great free database tool you can use.
So there you have it, all together: the machine, RAM, keyboard, mouse, monitor, USB key and several development tools have come to $568.98.
My little machine is fast and I have run into no issues yet. It's compact and lightweight, and the whole deal cost me a fraction of what someone would normally pay for a development environment. That, my friends, is fiscal responsibility.
Somewhere right now my dad is grinning ear to ear.