Sure, you can install Linux on a brand new PC, but my experience with it has been as a means to resurrect or at least resuscitate older hardware. I've found that when it comes to fixing up older machines there appear to be 4 basic classes of Linux candidates, namely:
(1) Gently Used
These machines tend to have a fast Pentium III, Celeron or AMD processor, lots of RAM, and a fairly decent hard drive and video card. It probably runs (or ran) Windows Me originally.
The likelihood of getting one of these at a garage sale or recycling depot is low. People still think they have value (they don't) so they are currently still in use or gathering dust in a closet for a few more years. The only ones I've encountered are my own rebuilt machine or one my neighbor was about to retire that I fixed for her.
These machines run just about any desktop version of Linux you want and play MP3s, have good graphics, and so on.
Verdict: A pleasure. I wish more of these were out there.
Here you'll get slow Pentium III or Celeron, not much RAM, barely usable hard drive and video. These machines usually ran Windows 98 and are slightly older. They are starting to show up in recycling stores or second-hand outlets. They were cheap when originally purchased (although the clones are better than name brands like Compaq.) To be useful they need added RAM - which is pretty cheap - and maybe a larger hard drive. It's not worth adding more than 256 MB of RAM though.
They'll run the more resource hungry desktops like Gnome and KDE plus browsers like Firefox, albeit at a more leisurely pace. They'll do better with a lighter Linux desktop like Xubuntu or Vector Linux.
Verdict: Generally OK but add some memory.
These feature Pentium II or K-6-2 processors, poor video, and low RAM and hard drive. They usually ran Windows 95 although some have Windows 98 on them now. These are easy to get and harder to fix up.
I have a Compaq Armada laptop that falls into this category. I picked it up cheap at a recycling outlet.
It has a nice 20GB hard drive and a pretty LCD display, but needed 128 MB of RAM to maximize its memory capacity before it was worth installing anything. Even with maximum memory it cried out for a lighter Linux desktop so I installed Vector Linux, and now run it with Fluxbox ( a very light window manager). It now has a wireless card I got for $30 or so.
Verdict: Surprisingly OK if you know what to do.
(4) Real Junk
Here you'll have a Pentium 133 or less, low RAM that is expensive to upgrade and has a maximum that is 80 MB or so, crappy video and miniscule hard drive. Often these pigs don't even have a CD-ROM. These always run (or ran) Windows 95. You often get these at a second hand shop, but people should really pay to get them recycled rather than donate them to anyone.
I have a Fujitsu 735Dx laptop like this. It took a lot of research to find a version of Linux that could be installed on it without a CD-ROM, was very, very lightweight and yet useful. The only one I found that I like is called Deli Linux.
A machine in this class struggles to do anything these days. It won't play MP3s very well (if at all,) it barely has enough memory to run a modern browser like Firefox 1.5 (and version 1.5 isn't all that modern, believe me.) The other Deli Linux browsers that are lighter than Firefox - Dillo or Konq-E - don't display web pages very well.
Verdict: Interesting curiosity. Useful to learn about Linux but should not be given away to a normal computer user. Geeks only.