My next step will be to update to LION tomorrow. I think this makes the 1201n even a better machine. 
I do not want to discourage people from trying/upgrading to Mac OS X 10.7. However 10.7 on 1201N is currently not in a quite usable state. This is my experience/observation so far with 10.7 after using it for more than a week.
I did a fresh install of Mac OS X Lion using Crazyjuice guide and booting in 64bit mode on EeePC 1201N. I have 4GB RAM, Wireless working (DW1510). Using Chameleon 1203 on a MBR partitioned disc.
I have noticed that the Lion is terribly slow and lagging, compared to blazingly fast Snow Leopard 10.6.8.
The only app I could use so far is safari even that is crawling :-( . Basically, every application is running much much slower, launching couple of apps soft hangs and I have to wait till the spinning rainbow wheel goes away. After installing Lion, it's like I have gone back in time to when I saw a sluggish PC with Windows! :-(
I have also observed lot of IO(disk) activity happening in background. Initially I thought it is due to the spotlight indexing. However this is going on and on even after a week of usage. The graphics is not as smooth/fast as it is in Snow Leopard. Lion is always hungry for CPU/Memory and does a lot of IO. Activity monitor show all CPU cores are busy doing something.
The CPU percentage is showing 116% in one of the cores. looks like it is not showing correctly.
Also the ASUS 1201N BIOS (326) needs to be reset everytime the OS X Lion is rebooted.
The current state of Lion on 1201N is like a working prototype.
I hope 10.7.2 update may fix some of the issues. So stay with the
fast Snowleopard 10.6.8 for some more time before planning for an upgrade, may be till 10.7.2 is out :-).
My two cents.