Is there a Linux system out there which doesn't fit in 32GB, even with all packages installed? I've a hard time calling a system with 512Mb RAM and 32 Gb "embedded".

Last time I looked at Linux distros, they all have "live-CDs", and full installations that fit in just a few CDs.

Only a few years ago, I build Linux systems for boxes with 8Mb memory, 25Mb of disk space, with the option of installing it from a floppy disk. Obviously, Perl didn't fit. What did fit was a kernel (same kernel used elsewhere in the company - standard kernel + 1500 bugfixes), a few drivers for exotic hardware, busybox, a couple of C programs I had written or modified, and an init script. This wasn't based on any existing distro.

My current idea is to use something like Gentoo or Arch and try to slim that down as much as possible, but I would like to get some recommendations from people that have more experience with such things.

With 32 Gb of disk space, why bother slimming down? Just go through /etc/init.d/rc? and don't start what you don't want running.

But this isn't really a Perl question, is it?