I'll probably just be using xfce, unless I find stuff like pmenu provide a performance improvement, by using less CPU time. Would be nice to run more intensive stuff like N64 emulators from a terminal without X for whatever framerate improvement that could bring.
Xfce is what I use on my main computer, and pretty much any computer that's mine. I don't use any kind of compositing...
Compositing on the pandora? No. It's unnecessary and probably would slow stuff way down.