Screens too small to surf web pages that are designed around 1024x768 minimum. A solid state HD at that price range will be tiny and it won't run mainstream windows applications. With the available storage, I"m not sure it's even going to be able to run add on applications.
It's a basic internet appliance. The approach has been tried before and always flopped. It's way too big to be a blackberry/iphone competitor and too limited to compete with the real laptops I can buy for $379-$449.
It'll have a minimal Linux release installed, probably no more capable than what is in hand helds. Too much money for what it is to appeal in the developed nations, might work in the third world.
I'm more excited by the fact that real laptops have punched through the $600 level down to below $400. Now if only they came with XP instead of VISTA I'd have bought one 6 months ago.