Considering Linux distributions that are based on RPM. How can we have the smallest possible of these Linuxes in size with minimum number of packages?
Fedora with the appliance kickstart will give you a tiny base to build upon. Be sure to edit the repos before using though.
This looked promising:
RPM Live Linux CD RPM Live Linux CD is a 120MB RedHat-based distribution that runs completely from CD, fits into around 80MB of RAM and is nearly indistinguishable from a system installed on a hard disk. Features include hardware recognition at boot, samba, dhcpd, name, xinetd, and SSH servers, virtual terminals, PAM, etc. Useful for dedicated servers, routers, emergency systems, cluster nodes and such, it does not contain an X11 Server.
Unfortunately, distrowatch reports RPM Live Linux CD (aka Basilisk Linux) as discontinued, and the site is down.
Your best bet is probably to download a RedHat/Fedora/CentOS server CD or live CD. To minimize the number of packages, just don't install anything you don't absolutely need--such as X or any window managers (e.g., GNOME, KDE).
It's also worth noting that there are other, non-RPM-based distros, which have been stripped down to the bare minimum, yet still have some type of package manager. DSL (available as a 50 MB live CD) is one of the better-known tiny linux distros, and I don't think you'll find much smaller unless you look at embedded projects such as DD-WRT.
You could use Suse Studio to build a tiny version of OpenSuse. The "Just Enough Operating System" base with all the defaults gives a downloadable iso file of 131MB.