Im gonna have to disagree with a few people here and say they wont drop the entry level macbook in favor of the macbook air.
Theres a few reason why.
1. The size. Most entry level laptop buyers, don't want the 11 inch MBA. 11 inches is too small for many. I should know, I'm currently using an Alienware m11x and while it was neat for a while, its become increasingly difficult to work with. They could step up to the 13" MBA but not if it remains at its current price and to be honest, I can't see Apple cutting the price of the MBA a 3rd time.
2. Lack of an optical drive. A good chunk of consumers buying entry level laptops still use CD's and DVD's on a regular basis. I know its a pain sometimes when you have an installation disk or a movie you'd like to watch and you simply have no access to it without a peripheral. It happened to me the other day and luckily I had an old external HDD enclosure that I modified with a DVD rom drive. Its ghetto but its working (sorta). Most consumer, won't do this and also won't buy a peripheral just for that reason.
3. Believe it or not, the slim factor actually bothers some people. The MBA is small and for some its too small. I know when I picked it up, I felt like I was gonna break it. Its like holding a baby. Some people just can't do it because it feels like its so flimsy and they don't want to "hurt" it. I've heard it more than once. It matters a lot to most entry level apple customers, because aesthetics on a mac is usually a large reason why they're interested in one. If they feel like they could scratch or dent it just by looking at it funny, then they're not gonna buy it.
4. Performance. I know they feel "quick" but the bottom line is, they lack raw processing power that most other entry level laptops offer. ULV processors are fine for most computing but anything that puts a decent load on the CPU can bring the computer to a halt. When coupled with low memory it increases the chances of your laptop bogging down with heavy use. My m11x has a ULV with 4 gigs of ram and anything over 300 dpi in photoshop is nearly uneditable.
Now with that said, there are a few reasons why I can see Apple replacing the macbook, but rather than compile a list of those, I'll state the obvious one.
1. Redundancy. With 2 other 13" laptops available at around $1000, its no wonder why people are suspecting Apple to be cutting the entry level macbook out. Similar performance between the MB and 13" MBP has always been confusing, given that the price difference afforded you commodity and not necessity.
Personally I think they should've stuck with the 13" unibody aluminum MB as the only MB, cut out the polycarb, and left the 15" and 17" as the MBP's.
However, I'd also love to see the reviving of the 12" powerbook.