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Puppy Linux is an extraordinarily small, full featured operating system. Puppy boots into a 64MB ramdisk, and that's it, the whole caboodle runs in RAM. Unlike live CD distributions that have to keep pulling stuff off the CD, Puppy in its entirety loads into RAM. This means that all applications start in the blink of an eye and respond to user input instantly.
Racy Puppy is Wary Puppy with new Xorg 7.6 and kernel 3.0.66 - a version of Wary enhanced to run on new PCs. Unlike Wary Puppy, Racy boots directly to the graphical desktop - it can use the full potential of graphics devices and has new device drivers for new PCs.
Basically, if you are asking whether to use Wary or Racy, the former is intended for older computers, especially uniprocessor CPUs and for those who still access the Internet by analog dialup modem.