I'm often asked by Windows users about a safe way of browsing the web. What they usually think of is a kind of minimal linux running nothing but a browser. The 'browser appliance' offered by VMWare is, in principle, exactly what they have in mind, but is dangerously outdated: it is based on Ubuntu 5.10 and was last updated in June 2006.
Out of sheer curiosity, I've build a kind of browser appliance based on Archlinux. Basically, it's a naked install of Arch, plus Xorg, and wmii as windows manager. One ttf font (liberation), one type1 font (xorg). One browser. Today, I felt like using firefox. ;)
The appliance includes, of course, all development tools necessary for the build of the guest additions in Virtualbox. It's just above 1 GB in size and has a memory requirement of less than 64 MB, so one can certainly run it even on low-end systems.