I recommend using
Ubuntu Easy Peasy or
Ubuntu Netbook Remix.(official)
Also,
Kubuntu Netbook Remix looks totally awesome and its first version will be available at the end of October.
Everything works out the box: wireless, camera, codecs are preinstalled, flash is preinstalled and it has Firefox 3, OpenOffice 3, Pidgin,VLC and Songbird!!!
You have to do NOTHING after the installation!
It really rocks
The official version does not come with pre-installed codecs I think, but it is very easy to install them.
The installation is really easy* and in case you have a question, everyone in the forums can help you,
since Ubuntu (on which it is based) is probably the most popular Linux distribution.
To make a live-usb you can use
Unetbootin, which works on either Linux or Windows.
* At some point it will ask you to make partitions.
-If you have the 80+GB HDD version,make:
1GB swap
10GB of type ext3, mount point /
The rest make it type ext3, mount point /home
-If you have the 8GB SSD version make:
1GB swap
the rest type etx2, mount point /
Be careful, it must be ext2 and NOT ext3.