How about a 1st-gen, single-core Atom CPU with 1GB memory and an Intel GMA950 for graphics? No appreciable difference between Arch and Ubuntu either. Just that Ubuntu 10.04 starts up faster again.
Or a laptop with a mobile Pentium 3, an Ati 9600 video card and 512MB RAM? That's your 2004 configuration right there - and nope, tried Arch and it didn't make any difference either (at least up to late 2008 when I retired that system).
I am/was using those of those for application development and light gaming (obviously not in the VMs!) The VMs, however, run a MySQL, Nginx and PHP5 for web development.
About the only things that actually make a difference between Ubuntu and Arch is (a) that Ubuntu uses Compiz by default, if possible, and (b) Arch doesn't preload or start services in parallel unless you instruct it so (which plays a big role in boot time).
Personally, I use Arch in VMs for development because I appreciate having up-to-date software. However, I use Ubuntu to host them, because its less of a hassle to maintain and update. Besides, if a VM goes down from a botched update, no big deal; if my workstation goes down, I'm f*cked.
Performance doesn't even enter the equation, which is fine because it is pretty much identical, as those benchmarks demonstrate.