It should fit onto a Live CD.
I'm gonna start with the Linux Mint 7 defaults, and add/remove from there.
I'd like to see the default GNOME games included.
I want to see KolourPaint replace GIMP, as it is much closer to MS Paint (for new users), while GIMP's complexity can be a turn-off.
Instead of Eye of GNOME, use Okular and GwenView.
Instead of Nautilus, use Dolphin.
Add either Amarok or Songbird in the default installation.
Finally, add Wine.
I've tried making my own custom spin, but it hasn't worked. If anyone knows of a distribution like this or close to this, I'd love to know.