Small cheap computers?
Well they succeed on 33% of that moniker nowadays, mostly. You acknowledge the field has been shifting towards larger, more expensive models (where pre-installed Windows represents a smaller proportion of the retail price) but I see no evidence this is actually what customers want, at least as a bigger influence than greedy manufacturers fleecing us.
Yes, greedy manufacturers, who can add a couple of inches on to the size, sell it as "bigger and better" whilst removing the smaller options from the shelves, leaving the average gullible punter with no choice. Those couple of inches mean they can share more parts with full size bargain-bucket laptops, so they are probably actually cheaper to manufacture than 7" or 9" models, but can be sold for the significantly higher prices as we're seeing.
Hopefully the arrival of the ARM based netbooks from Pegatron, Qualcomm etc pencilled in for the summer will shake things up again.