Recently when I tried to upgrade my ASUS Eee PC from Ubuntu 7.10 to 8.04, it made a complete mess -- 4GB internal drive is just not enough to hold all the applications, data + new packages for upgrade. So instead of trying to fix a borked Ubuntu installation, I tried to install Hardy Heron from scratch again.
EeeUser Wiki has a complete instruction on how to get Xubuntu 8.04 onto a USB key so Eee PC can bootstrap from it. The only problem is -- it is too complicated and it does not work (for me at least). Downloading the Xubuntu ISO is the easy bit, but making a bootable USB key is PITA. I was booting the Xubuntu live CD from VMWare, follow the instruction to dump the content onto a mounted USB key -- doesn't work. Download the utilities from Pendrivelinux.com to prepare the USB key -- doesn't work.
I guess what I should have read is the this document instead, which points me to UNetbootin, the Universal Netboot Installer. Download a 3MB Windows executable. Run it. Point it to the downloaded Xubuntu ISO and the drive letter for the USB. Click Ok -- and it's done! Booted my Eee PC with it and half an hour later it is now running Hardy Heron. Too easy.