what are the space requirements for linux and for win ce (.net) for a
small device which has mainly to connect to the net. the version for
Win ce would be pro
Also, on what kind of a storage device could the OS for a small device
be installed. Could it be installed on flash memory? compact flash?
ROM?

Absolutly. Not so much for WinCE.. since it is designed to be run on
one platform, but Linux will run on anything. There are numerous
different distributions of Linux that can be run on small devices. For
example, Trinux is a floppy based distro of linux. There are many
other non linux ones.. such as TinyOS.. a UNIX based embedded OS.

thanks phrite-ga , so Linux  can be installed on any of the mentioned
media (rom, flash, compactflash) but what kind of min space req does
it have (if one needs net connectivity )
Also, can a z80 level chip handle (some distribution of)linux or does
it need more power?