That's hard to say, not knowing the rest of your netbook's specs. From what I understand, though, Ubuntu Lite is kinda supposed to do what Puppy Linux does, like work on older systems (like, p3 old, which is why I have it). My netbook's a pretty "old" model by now, and I'm running Ubuntu 10.04. I don't quite remember if the install took much more than 3GB of space, if that (not including a swap file, but still, if you're using that much space anyway, it might be worth it to switch, and use that 4GB USB to store your files...?

When I used Windows, I used a program called PageFour, which was basically opened up groups of .rtf files as tabs. So I did all my brainstorming and drafting there, and would only use OpenOffice for formatting and polishing. Once I found out that Ubuntu's text editor did essentially the same thing, I never looked back. Granted, I don't know if I could write a novel that way, either. But then, I've always been a short story kinda guy. :)