Considering how fast technology evolves, Intel's ad isn't so far from the truth.
Whether you need a new computer or an upgrade however, is a topic for another thread.
I love KMandla's blog, and this was a good read as always. I am very grateful for discovering Linux because it's allowed me to extend the life of some older hardware. His advice is great if you love the command line, minimal installs, and lightweight applications (and I'm guessing most #! users fall into at least one of these categories).
However, as a counter-observation, I see a lot of new Linux users (especially on Ubuntu Forums) who have heard "Linux is good for older computers" and waste their time trying to cram a full-featured modern distro onto an ancient computer they found in the closet. Software cannot solve hardware problems; if the computer is old and crappy, recycle it! These days, you can purchase an energy-efficient computer capable of running any Linux distro for under $200 (or if you're on a tight budget, buy 2nd hand; I see P4's for under $100 on Craigslist all the time... and if you're patient you can probably find someone giving away a P3 for free).
For example last year I replaced some aging hardware with a Foxconn Atom barebones kit. I used my existing hard drive, CD-RW drive, keyboard, mouse, and monitor, so the only extra I needed was a 2gb stick of RAM, total cost about US$150. It outperforms anything Pentium 3 or older and will pay for itself in energy savings over time. And because Linux does not have the licensing restrictions of Windows, I didn't even need to reinstall the OS, I just turned on the computer and the new motherboard was automatically detected!
Another thing I see that drives me nuts is users who refuse to upgrade their RAM; their computers are capable of 512mb or 1gb but they stubbornly insist on sticking with the factory-preinstalled 128mb and then waste countless hours messing around with minimal Gentoo installs or complaining that "Linux is so bloated"!
OK I need some coffee.
+1 for k mandelas blog
don't forget we have fancy things now such as colour, networking, true multitasking, heck even usb drivers (I know they don't use 1mb of memory but all the little things you wouldn't consider probably add up to over one mb of memory).
early unix versions probably use less than 1mb of memory, as would linux 0.1 tho, so if you really wanted, just use one of those .