you really want to set your runlevel to 3, edit /etc/inittab and edit
id:5:initdefault
to
id:3:initdefault:
I think Russell still wants to boot into X, just using a lighter window manager rather than Gnome (16MB RAM!). I guess it would be an .xinitrc file change. IIRC, switching to runlevel3 would mean he would have to issue a startx command.