Ubuntus latest release, Gutsy Gibbon, now includes support for the embedded and mobile spaces with the Ubuntu Mobile and Embedded (UME) project.
Read more about it here
Get to know the UME project, and find out how to get started. The primary objective of this tutorial is to get you quickly acquainted with the Ubuntu embedded framework and tools. Along the way, you learn about several tools and new approaches to Linux kernel configuration and environment construction. You also learn about some other projects with goals similar to the UME project.