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I have a five year old netbook, EEE PC 1001 HA (bought in February 2010), and recently there was some news that Microsoft has stopped supporting Window XP. Can I switch over to Ubuntu? I have worked out it and liked it. Can you tell me which version of Ubuntu would be good? And as it does not have a CD drive, can I use pendrive instead?

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I'm happily running Ubuntu 14.04 (64bit) on a 1015PEM, having an Atom N550 CPU.

The CPU of your machine is an Atom N270, which means that you most likely have to install the 32bit version.

Installation from a pendrive works like a charm.

If you can get replace the original 1GB RAM with 2 GB for little money: go for it. Note that you cannot add another SO-Dimm - you have to replace the old one.