"Yeah; but Linux needs 5 GB doesn't it? For the graphical version?"
no.
if you include every single package available for linux, it comes in at under 4 gb.
3 desktop environments [or gui's]
20 different games
8 different media players
web server
ftp server
telnet or other client server
imap server
smtp server
more than 3 image editing programs (windows only comes with 1: paint)
tools to recompile the kernel
software development (c/c++ compiler, python, perl/cgi, php)
you can completely customize what and what is not installed.
i know i am forgetting tons of crap, but it is still <4gb total
this is just for redhat, as some distrobutions have more than 5 different gui environments, and all distros come with a tool to make your own (still going to be under 4 gb FOR ALL DISTROS!!!!)