OK, after reading all of this here's my two cents and a quick glimpse into the mind of the consumer.
Price: Face it, the price is good, and anyone claiming that a cheap PC is still cheaper should consider looking a little bit deeper into things. Remember that when Joe Consumer walks in to his local Circuit City to talk to the kids who couldn't tell a TV from a toaster, he will likely be shelling out $700 or $800 for a "low-end" PC and have to consider the hassles of three or four mail-in rebates. To most people this process is annoying, convuluted and fraught with frustration and simply not having to deal with it is a big plus. And as an aside it should be noted that the general "bargain" PC is a terrible piece of equiptment that made from sub-par components with no backing, or is marked up and under powered (Dell), at least with Apple you know you'll get a computer that does what it's supposed to and a retail network that can support it, this kind of accountability matters when considering some mystery brand PC and the Mac Mini
Capabilities: It won't work wonders but then again it doesn't have to. If you can make cool slideshows in iMovie, update little Susie's iPod, and still accomplish normal internet/school/work tasks then it's more than suited for 90% of the computer users out there. If you want something more capable you should be prepared to pay for it.
Add-ons: I think the BYODKM idea for this computer was perfect. Let's face it, the normal user does not need little glowing apples in every corner of there room, and the premium price of Apple equiptment is never more obvious than when looking at their periphrials. A simple LCD 15"-17" can be had for around $200 and a CRT monitor for less than $100, and frankly most people probably already have one. A decent optical mouse and keyboard can be had for around $30 or less so long as the buyer does not need everything to be Apple, and face it, most people don't. so the supposedly "hidden" costs of this computer aren't hidden, it gives poepl more options and who wouldn't like that.
iLife: iLife, this one should be obvious. Digital photography, cameras, music etc. is becoming a staple task for the home computer and iLife is hands down the best consolidated apporach to this out there. Coming free with every Mac should be a huge incentive to new users, like all things OSX it's intuitive, easy to use and forgiving for the average user. Similar programs come bundled with almost everything PC and I can tell you from personal experience that free media programs on PC are possibly the worst pieces of software ever to fall into the public's hands. Arcsoft and the likes turn slideshows into heart surgery for the average user and a capable program suite with features comparable to iMovie and iDVD alone would easily cost $150-$200. iLife is key to this effort becuase it offers what people want and how they want it.
OSX and Convenience: OSX is easier to use and understand than Windows hands down. People will be attracted by the security and the convenience of an operating system they can understand, and don't have to hassle with over zealous security procedures and constant bug-fixes downloaded by the dozens. it's hard to put into words but Apple is just easier to use for the average user and they know it, now that it's been put at a reasonable price point the switchers should come in droves I would expect.
Sorry I wrote a book about this but I think it helps to point out what the average consumer will be looking for. It represents a change to a more positive computer buying experience and for some people thats all they need. My dad is most likely going to give up Windows for this computer after having dealt with it since 3.1, in many ways this represents the average consumer and the average consumers needs and that can't be discounted.
