For out of the box distros, Ubuntu 10.10 seems to have the best blend of ease of installation, hardware compatibility, and folding performance. Even a Linux novice can get it up and running easily. There is a low overhead custom kernel console only distro that is supremely good at folding and I can't remember what the name of it was. I believe that it was Gentoo based. You could always compile your own kernel or set up and run a highly customized Arch Linux. I know overclockix was another popular distro and it could be run headless, I think or at the very least from a live cd.
For simplicity sake and ease of setup and use (particularly considering the easy graphic card driver setup) Ubuntu is the best there is... having a newbie compile the closed-source fglrx drivers and configure kernel modules (which I've never even done successfully with intermediate knowledge) is asking too much. Ubuntu does that, and the nvidia drivers too, through the Restricted Drivers control panel, which is great. Still, I have to wonder what makes newer (10.04 and later) Ubuntu releases use 1GB ram on my system when I go through and use bum (bootup manager) to disable bluetooth and all extra services except gnome essentials, cron, etc. Especially considering I ran 9.04 from when it was released until about a year ago and it used 200mb in a similar configuration.
I will definitely try that bare bones folding link I posted, and perhaps set up an optimized console only ubuntu folding VM using the alternate install CD and compare those both to Windows 7 native folding.