The 7.10 live cd only requires 256M too, it says that. However it needs more than that if you start the installer. Maybe it should say it needs more than 256M to run all its features rather than letting the user find out that it hangs while partitioning the disks?
Have they fixed the bug I found in the installer messages?
7.10 puts out exactly the same warning message just before it partitions the disk whether it is going to destroy your windows partition or isn't going to destroy it. Not the most useful message.