I don't think that's enough computer for Windows 7. The minimum is probably 2 gigs of ram, and my Windows folder uses about 20 gigs of disk space all by it'self.
I would guess that you would be better off sticking with Windows XP.
As Mike suggested, it would be best to stick with Windows XP unless you plan to upgrade your hardware. Windows 7 requires at least 512 MB of RAM but runs hellish slow with anything less than 2 GB.. The Celeron line of Intel's is fairly out and underpowered.
If you added a stick of RAM you might get a half decent experience otherwise stick with XP for now.