I'm successfully typing this on a Win7 laptop with much worse specs than that! 1.5 GHz single-core CPU, 1 GB RAM, 80 GB HDD, integrated graphics that can't even handle Aero. You get the picture. Surprisingly, it is a pretty smooth experience. The OS runs great, though of course some more resource-intensive programs stutter. I recommend adding another 1 GB of RAM in your case, though. It will definitely help. Instead of doing that, I used a flash drive I had laying around for Readyboost. I found that helped my performance. But yes, I would say go for Win7.