There is no reason whatsoever not to use VL 5.8 Standard (yes, the current version) on your system. I have a Toshiba Libretto SS1010 with a 233MHz Pentium MMX processor and 64MB of RAM and it runs just fine. What doesn't run is some of the heavier applications. Don't install Xara-LX or the games pack. You don't have the horsepower for those. Seamonkey will be slower than molasses running uphill in the wintertime. I uninstalled it and took out Java and Flash while I was at it. Again, you just don't have the horsepower. Firefox will be pretty darned slow as well. Opera is a better choice and Dillo will be quite fast for the sites it can support. Don't expect to do a lot of multimedia other than fairly minimal stuff (like listening to a CD) on your system. That's as true in 5.0 or 5.1 as it is in 5.8.
You can greatly improve the speed of VL 5.8 Standard in 64MB by moving to a lightweight window manager instead of Xfce. Fluxbox,, Afterstep, JWM, WindowMaker, IceWM, and PekWM will all run well and are all in the repository. Of those JWM and PekWM are the fastest and will run like greased lightning on your system. WindowMaker is a close third. If you choose PekWM (truly minimalist) you can add fbpanel (currently in testing) to give you a panel/toolbar with the same menu that you'd get in Xfce. In the others expect to have to customize your menu.
If you are comfortable installing a newer kernel grab the 2.6.21CK2 packages out of testing. They are significantly faster than 188.8.131.52. Firefox will almost be usable with the newer kernel. I did say almost. Opera is still better.
Don't even think about OpenOffice. The good news is that AbiWord and Gnumeric will run just fine. Scribus will be slow but usable. All the text editors and Bluefish will be perfectly happy. xpdf will work just fine. Wireless will work but is best done at the command line. wifi-radar will be terribly slow starting up and closing. Oh, but yes, it will work after a fashion.
There simply is no reason to go back to an old version of VL.