I'm pretty sure that Palmer, as well as some other people, are missing the point of the Mac mini completely. They didn't make the mini with the goal of selling Apple keyboards, mice, and Cinema displays with them. Especially with the cinema displays, the people the mini is targeting probably don't need or want a $1700+ display. The idea, which I'm sure someone has pointed out already, is that people who already have an entire Windows PC, or an older Mac, and who may have been contemplating switching due to an experience with the iPod or just their experiences with Window's problems, can easily and cheaply swap out the box and use the majority of the peripherals that they already own. The target audience isn't generally going to be someone who is happy with what they have, but they want to inexpensively make the switch to OS X and the iLife suite, and a freedom from the viruses and spy/ad ware that have plagued Windows increasingly over the last couple years.
It also provides a way for current Mac users to either upgrade an older Mac (like my parents beige G3) or to inexpensively add to the Mac they already have. One good example of this is with my family. My sister is going off to college next year, and wants a mac (I have a G4 iMac) and my parents really don't want to spend a ton on her. So now that the mini is out, they can spend $500 on a more than adequate computer for my sister (and most other normal computer users), and just use the monitor and keyboard/mouse that we already have for one of our two older macs.