Raspberry Pi interview: Eben Upton reveals all (Linux User)

Lubuntu would run quite well (if it was on ARMv6) since it uses LXDE - although that's not an official Ubuntu variant, it's semi-blessed by the Ubuntu project (part of the main archives).

Linux Mint LXDE would also be a good option, as it's Debian Testing based, but someone would have to do the work of ARMv6 support - http://blog.linuxmint.com/?p=1930 ... Probably easier to use Debian directly and port a few Linux Mint bits over if needed.

I agree that it's a strategic mistake for Canonical to miss out on such a huge grass roots movement that focuses on Linux hacking for kids.