Check out floppyfw for a simple firewall and IP sharing device. No hard drive is needed, and 16 megs of RAM is more than enough. The instructions on the site and in the comments in the config files are quite easy to follow. One somewhat tricky problem is if you are using a network card that isn’t supported on the image. We used a 3Com 3c509, which worked perfectly, but we also used an old SMC card. To use a card that isn’t on the image, go to the floppyfw modules page, and download the correct module. The module we used was the wd.o module. To get the module to load correctly, we put the floppyfw floppy in and:

# mount -t msdos /dev/fd0 /mnt
# cp wd.o /mnt/modules/
# vi /mnt/modules.lst
[add a line to modules.lst: wd eth1 irq=3 io=0x280]
# umount /mnt

Do note that the line we edited was in modules.lst (sounds like modules.list), *not* modules.1st (sounds like modules.first).