If it's only got 1gb of memory, upgrading to 2gb of memory will help a bit with Win 7.

As for moving to Windows XP, pretty much every Netbook model I'm aware of will run XP and will be easy to find drivers for. So if you have an extra retail copy of Windows XP (Home or Pro) or you choose to buy one... you can certainly install it and run it on there.

However, as far as I know the only version of Win 7 which legally includes a "downgradable" license is Windows 7 Pro, so if you want to keep things legit you will need to get a separate copy.

If you don't care about keeping things legitimate, it is not at all hard to get a copy to install either by downloaded a copy or by transferring an OEM copy; the former is outright illegal violation of copyright, and the latter is of questionable legality and is a license violation.