Personally I use Ubuntu Netbook Remix on my Asus eeePC 1005PE. It works out of the box, wireless, bluetooth, webcam all fine. There is a slight problem with the built-in microphone but there's a workaround.
I've installed Eclipse (but haven't tested fully) which is a Java (and the rest...) IDE. You can install Gimp (as Photoshop replacement).
Yes, grub overwrites the mbr, but that's not what controls the hardware system restore (as far as I know - don't blame me if you lose it).
As I understand it, the hardware system restore lives in a separate partition near the end of the disk (along with Asus' own operating system Express Gate in an even smaller partition). When I installed Ubuntu, I was careful to leave those partitions alone, although it did take a bit of guesswork to find out which they were. If you leave them alone, Grub will auto-detect the system restore partition (mine calls it Windows Vista (Loader) - even though it came with Windows 7 pre-installed) and give you the option to boot up into "windows" but if you do this, you lose your Ubuntu installation because it restores the system back to factory state.
On mine, I left the end two partitions, the 11Gb FAT (I'm guessing system restore??), and the 17MB EFI, FAT-12/16/32, (I'm guessing Asus Express Gate).
WARNING: This is mostly guesswork, I haven't tested the system restore as I do not want to lose my Ubuntu installation. I'm not even sure if it will work when I try it. Make sure you do your research before doing anything potentially irreversible.