Linpus Linux runs just grand on my Acer Aspire One, bought for £150 a year ago.
I'm 26 so not in their target demographic, but it does well as a "living room" machine, for checking the internet / emails when there's nowt on the TV.
In fact, my non-techie whatsoever girlfriend was so impressed with it that she now dual boots Ubuntu on her Vista full-latte laptop (which ran like a 1 legged dog) and uses it now as it just works, and works fast. Especially after the last fake-antivirus worm she downloaded thinking it was a real virus warning. At least on Linux it would just laugh, and easy to get rid of, even under wine.
Windows has it's place on top of the range laptops, secured to the hilt with every single anti-virus, anti-spyware and firewall known to man (even then something will get round them), but for just getting stuff done on a small netbook, Linux all the way.