After trying Ubuntu on my parents machine for a few months $115 was the best money spent for an OEM copy of vista 32bit. The headaches where just not worth it. First the digital cam, then the camera, then the scanner, Software the friends tell them they should use etc etc. oh if all this happened at once would have just got it setup and left it but it seamed like every time I was over I was installing something or telling them "No that program will not work under Linux" which they simply could not understand.
Worth a go but I will never do it again. Least my Dad can read the help files and get things sorted himself alot easier with Windows with alot less hassle.
I've had similar experiences to this with installing Linux on a parent's machine. It's simply not worth the hassle. The 90 bucks you could spend on an OEM Windows license is like 5x the amount your time is worth talking through "linux things" with people who don't really understand "windows things."
Yes, you do need to evaluate the needs of the user and -- if they are not technically savvy -- your willingness to provide technical support, if the machine will be used for more than web/e-mail/office type tasks. These factors can range from a non-issue to a show stopper.
For Windows apps that don't need to install special drivers, running them under Wine
may be a viable option.
Linux driver support for peripheral devices has improved quite a bit over the past couple of years. These days Linux arguably supports older peripherals better than XP/Vista does (even my not-so-old Epson inkjet printer is supported out-of-the-box with no additional drivers needed, which was a pleasant surprise), but Linux still lags a bit when it comes to supporting newer devices.