LAPTOP Magazine has a how-to guide on slimming down the Windows XP installation on the 4G Asus Eee PC.
As the article points out, when you pull your Eee PC 4G out of the box and boot into Windows XP, out of the 4GB of hard drive space, you actually have less than 1GB of space free, which is very limiting these days. You can work around that by buying a large Secure Digital (SD) card for the little laptop, and installing some applications or storing data on it, but that then means you won’t be using it for copy pictures from your camera, etc.
With the techniques outlined in the guide, you should be able to almost double your free space.
Guide: LAPTOP Magazine