Dell is selling Ubuntu equipped systems since about a year now and seems to be quite happy with it. Whatever that effectively means, at least I can tell that I’m quite happy with Linux on Dell systems, too.
Through the last five years, I’ve been using Linux on a number of Dell systems. Under my personal control there have been three laptops (Dell C610, D610 and a Latitude 640) and a desktop (Optiplex 755), on which I have been running Debian Sarge, Ubuntu Dapper, Feisty and now Hardy. We also had several Dell servers at work running more or less smoothly with Debian (sarge, etch). Using Linux wasn’t always without problems: I had trouble with built-in modems, PCMCIA ISDN cards and acpi/hibernation. For example, on my private Latitude 640, I have trouble suspending at all, because of the ipw3945 driver for the wlan. But the important thing to note is that basically all problems were really small and never of a size requiring me to use some other OS in the first place.
The only real issue is not with Dell per se, but more with my favourite OS, Debian: over the years, and especially with the ever-lasting sarge release, getting Debian to run on a recent system got more and more difficult. That’s the main reason why I’ve been using Ubuntu on all recent hardware I had contact with: it’s more or less (more so than less) a Debian system but does run on modern hardware. Main issues here were graphics adapters, sata/scsi hostadapters and network/wifi cards, or to put it otherwise: too old kernels, too old X.org. Both problem sources can simply be solved by using a recent version of Ubuntu. Sorry, Debian, but your release cycle is just too long to be acceptable. Granted, all these problems are mostly an issue when installing a new system, but it’s not always possible to plug in some old disc with a working version of Linux.