I am using Linux for last 10 years on my PIII 750Mhz coppermine, with 384 MBs of SD RAM desktop PC. I started with Redhat, then used Fedora and for last 3 years Ubuntu. Presently I am typing this post from the same machine, running on Ubuntu 8.04. I never used Windows XP. The last Microsoft OS I used, was Windows 2000 Professional. Win2K pro was an excellent OS for it’s time but I never felt that I lost something after a total migration to Linux.
My old and obsolete PIII 750Mhz machine cannot run latest 3D games or 3D modeling programs like Blender or Wings, but it can run google earth smoothly, without any other programs running in the background. It can run all office and productivity applications more or less smoothly, including a GIS program. It cannot edit videos but it can play DVDs with 4 track sound.
Modern netbooks are slightly more powerful than my desktop in terms of clockspeed and HT. So I am sure they shall be able to run all the applications I run regularly on my PIII 750 Mhz with Ubuntu. If so, then only very few people will ask more from these comparatively underpowered (and low priced) machines.
From my experience I can tell you that Ubuntu is a great OS, completely trouble free and have a nice and simple interface. I hope that the Netbook Remix will be no exception. In that case these new netbooks and Ubuntu netbook remix have the potential to change the computing experience of lots of Windows users.

I’ve been using Ubuntu as my main OS for about 3 years now and find it by far the easiest distro to use and lets me just work. No need to command-line tweak anything.

I was wondering if you ever have tried Kubuntu? Being a windows guy, KDE may be less of a change for you when compared to Gnome (what Ubuntu uses by default).