FFOS is a good mobile OS. I have tried version 2.0 in a ZTE Open and although this is also a crappy phone (single core CPU, 256 MiB RAM), it is not as crappy as the Cloud FS. The keyboard works well, and the OS runs rock solid (no hangs, decent speed). The only problems with this phone are the crappy camera (slightly better than the one in the Cloud FX) and the poor multitasking due to the low RAM amount.
If you install FFOS e.g. on a Nexus device, you will find it performs great and it has no multitasking problems. I like FFOS and I've been considering switching from Android to FFOS, the only things I'm missing right now is a good SSH client that works "offline" (e.g. not connecting to a web page through the Internet) and a swype-like keyboard.
About these extremely low spec smartphones, I think something like the almost dead Symbian would make a lot more sense. I owned a Nokia 5800 some time ago, with the same amount of RAM (128 MiB) and a weaker CPU, and it performed pretty decent. 128 MiB is just too low for a full featured mobile OS like FFOS.