The Foleo Would Have Missed
It may seem like a small thing, but they had the targeting completely off for the Foleo. A companion to your Treo? I don't - and won't, thanks to the iPhone - own a Treo, and I don't want my laptop to be tethered in any way to my phone unless I'm out in the middle of nowhere and need to use the phone as a modem.
Sure, it would have been a nice Linux laptop, and in that regard could serve as well as the EeePC, but it wouldn't have served users like my wife (who now enjoys surfing from the couch on her EeePC) nearly as well. Custom web browser, email that you have to download from your Treo, non-x86 processor that can't run the Linux Flash plugin...
They got very close in specs, but they screwed it up a bit and they positioned it wrong. The EeePC is a minor iteration on their idea, but it's the iteration where things came together. Now the EeePC alone is practically a new class of laptop (even though machines like it have been with us for a long time, often imported from Japan), and the Foleo never could have had that kind of impact.