The question of which distro is best has been asked to death and no one has provided an answer because few people have tried several different distros.
I've thus far tried YDL 6.0, Ubuntu, Xubuntu, Kubuntu and tried to install Gentoo but failed miserably.
If you're a linux expert, Gentoo might be perferable but otherwise...
Out of all of the one's I've tried, YDL 6.0 has by far the best support and most capabilities (with the possible exception of Gentoo).
This link has absolutely everything you need to know to install YDL and maximize it's capabilities. The distro basically installs itself if you have a hdtv.
http://www.yellowdog-board.com/viewtopic.php?t=2274
The only think I have to add to that information is, don't bother install e17 as the desktop environment, go with the much faster Gnome, and if you feel compelled for blazing fast speed, switch over to Fluxbox as explained in the link I posted.
http://www.yellowdog-board.com/viewforum.php?f=19 is a fantastic resource for absolutely everything you need to do on YDL, from getting Wifi working, to getting a bluetooth keyboard and mouse working, to installing emulators for Snes, Genesis and Mame, and even 3d games like Quake and Hexen and getting them to be controllable with the Sixaxis or DS3 over Bluetooth.
And yes YDL 6.0 has wifi working...
To entice you, here's a few videos on youtube showing a few perks of having yellow dog on your ps3 check them out;
Playstation 3 running SNES Killer Instinct using wireless dualshock 3
http://www.youtube.com/watch?v=nNhH7hLnYbo
Playstation 3 running Super Nintendo, Genesis, TG-16, NES
http://www.youtube.com/watch?v=hqP_NXN3-ak
Playstation 3 running MAME
http://www.youtube.com/watch?v=q24AXU0o3I8
Playstation 3 running Gameboy Advance Gameboy NeoGeo SMS Gamegear
http://www.youtube.com/watch?v=VO5Oukbq1Qk
Streaming Shoutcast on playstation 3
http://www.youtube.com/watch?v=vSjv0hgUdGA