Well, network is out of question - when students would be using there won't be internet connection...
The one I created with tiny core linux was just under 40 MB, but things like man, color options for ls/grep etc are beginning to look wrong idea for students starting with linux..
I think I will have to look for other small distros to suit my purpose (basic linux commands with man pages, vim, perl, tcl, bash scripting) - let me know if there are ones for this (max 300 MB)
Thanks for all the help