I have a 1.42Ghz iBook G4 with 1.5 gigs of ram on the original hard drive with 10.5 (leopard) and she runs just about as fast as my 1.8Ghz HP Mini 110 with 2 gigs of ram and 10.5. Which is saying something seeing as they are a good 5 years apart in age.
I am using [http://www.floodgap.com/software/tenfourfox/|TenFourFox]browser its better then firefox or safari, actually it runs pretty *^^* well.
I think TenFourFox runs on 10.4, so if you don't need any software that needs 10.5 i would do 10.4. (i however us CS4 and Espresso which both require 10.5)