I do on my laptop, not because it's an old machine just because it's
less resource hungry (working on the basis that less thinking time =
more battery time).
All the apps are minimalist and non bloated - using abiword and
gnumeric instead of open office, mousepad instead of gedit or kate.
The only thing that will bog you down is if you decide to use 'big'
packages like Gimp, OpenOffice etc...

Xubuntu should be okay for an old machine you can always try out the
live CD before commiting to an install.