Gotta agree with you notjustjay. If it had been last year I probably would've been writing this from my Acer Aspire 1 - used it for 2 years when in college, I couldn't afford anything better than, so I worked with what I had.
- the keyboard was small, but still, I've written 80% of my essays and a writing for my bachelor's degree on it.
- the screen was small (9 or 10 inches if I recall), but I got used even to that.
- the most important things for me were the portability - ah, the hours spent in pubs

and decent battery life.
It wasn't perfect, but it was useable. Sometimes better, sometimes worse.
If I hadn't come across Apple at my work last year I would probably still be breaking my fingers away on that thing - when I'd encountered Macbook Pro 13" I had the epiphany: "Now that's what I was looking for!"
But to the topic: as notjustjay said - the biggest problem with the netbooks was the OS (combined with poor power). Mine had an Atom and 512MB RAM and Windows XP (thank God it wasn't the "7"). It was doing great for some time, but then it started getting slower and slower and crashed basically everyday - and I can't count the times I've lost my work due to some system or software (Open Office) failure. So then it was time to move on and thankfully I could go "crazy" and buy a Macbook or else I would've probably moved onto to another Aspire 1...
PS. My mother, seeing the Aspire, liked the "netbook" concept - she has an (awful, just plain awful!) 14" Toshiba at home and she wanted a lighter computer for travel. As she can't carry heavy things she chose to get a netbook and got a Sony Vaio (the 10 or 12 inches version, I don't remember). It's been almost 2 years ago since she bought it and she haven't used that thing more than 8 times since. Everytime I visit her the Sony just sits on the same shelf - I took out the battery, cause I'm afraid it may rot any day now from not being used

. I remember the sheer horror when I took that Sony out of the box - it has Windows 7 Basic installed - I think my old Amiga 1200 OS was probably snappier. Everything takes an eternity on that netbook - start up, to setting WiFi, to opening web browser... and the updates! Horrible.
Bottom line is my mom is still using her old Toshiba (at home) and a smartphone when she's travelling... She only takes the Vaio on long trips.
So yeah, Jobs was right. I mean the netbook concept wasn't all bad, but it clearly wasn't the best either
