Xubuntu would probably be the better choice, because I think 256 is the minimum requirement for Ubuntu, but it could run. Try Ubuntu first, it is a great OS and has great features, should also be fully compatible with that rig (given it has enough RAM).
If all else fails, go with Damn Small Linux or Puppy Linux. Those will work on something with a 766 MHz processor and only 64mb of RAM, but aren't packed with as many features as Ubuntu. Of course, they are only 50 to 100 megabytes in size.