I've never used it before but I'm told Arch Linux has a very low memory footprint and would make an ideal OS for the RasPi.

It already runs on the PogoPlug, and the website also list the following as supported devices:

It runs on anything ARMv5TE or higher, including plug computers, OxNAS devices, WebOS, Android, Nokia N900, PandaBoard, Beagleboard, TrimSlice and pretty much any ARM device.

Arch Linux ARM | Arch Linux ARM