I've recently become a Gentoo convert but it's not necessarily (although it can be) a "tiny" distribution. You could check out DSL or modify one of the existing bootable distros like Knoppix to make room for your MP3s.
One suggestion though - if it were me I'd get tired real fast with that scheme. If I were you I'd get a cheap laptop HD, say 20 or 40 GB and boot from that instead. It'll boot faster and you won't have to swap CDs all the time. Just my 2c though.