eeepc - does what it says on the tin
Recently bought one of these gadgets before going on holiday; and I can't sing its praises high enough. The fact it runs Linux is rather irrelevant - everything "just worked" which is nice for a change! All the apps work just fine, and the support and maintenance is no harder than it would be through Windows Update. As a geek I'm pleased to see that does run on something other than Windows, but that was not a factor in my decision to buy it. It is essentially a tool that does what it says it'll do - I haven't felt the usual compunction to install reams of extra stuff on it like I have done on every other PC I've had :)
There is clearly a large market for this sort of thing; ASUS's sales show this, as does the fact that as soon as stock comes in, it sells through pretty quickly. 1Kg in weight is great, physically robust, self-contained (the PSU being an in-plug affair, not the monsters you need to run a traditional laptop) - not really any different to taking a large book with you. And at £220 you really can't go wrong! Think of it as a second PC, perhaps - one you can really use anywhere (garden, living room, kitchen), easily to hand for internet searches etc.
Personally I find the 7inch screen fine, for what the device is supposed to do. There's a 9-inch version coming along in a month or so for those who feel they need it - but it'll be interesting to see if the pricing affects the market dynamics, as its price will be nearer the price of a normal basic laptop.
As a side note - pricing I've seen so far indicates the Linux and XP versions of the 900 will be the same, so MS are presumably keen to get their OS onto the device; they won't want these things becoming ubiquitous without Windows...