Gentoo is a popular Linux distribution with a powerful package managment system called Portage, based on the concept of BSD's ports. All packages are compiled from source during the installation, allowing for flexible choice of options and optimisation to your particular hardware.
I wrote up a description of how I got a Gentoo rootfs running on a hard disk attached to my slug. I originally intended to post the description here, but because of the recent outage I posted it instead to the unofficial Gentoo Wiki. You can view the article at http://www.gentoo-wiki.com/HARDWARE_Linksys_NSLU2 . -- Dan C