But only because they cannot or are not willing to spend the money on a SSD.
If you see the Air as a cheap way to get an SSD (in a 13" Apple laptop), you are right. By foregoing processor speed and RAM you can get a 128 GB SSD $250 cheaper and 256 GB SSD $400 cheaper (though getting a third-party SSD will narrow that gap). Even if you equalise the RAM (for $100), you still come out cheaper.
The biggest problem of the Air from a performance to price ratio however is that you are stuck with one internal disk (making the 64 or 128 GB SSD combined with a 500+ GB HDD impossible, something which is close to a sweet spot performance per price wise).
Everyone is missing the point of and the market for MBAs. They are not for numbers crunching, video editing, serious Photoshopping or frankly anyone needing 500G of storage. If you need to watch the same movies over and over and want to keep them onboard then this is not for you at all. But with the SSD and 4G RAM I can run Aperture which has been slow on my first-gen (first week actually) 2008 MBA as well as Office, if I must; iLife, iWork, and a bunch of non-SuperGeek apps that "most" people need and want. This is in no way a criticism of those folks who need far, far more computing power. It's merely a reminder that everyone's needs/tastes are different and change/evolve over time.
The first computer I bought for my then small business was a DEC PDP-10, one of the first "Mini Computers". In 1981 $100K (yes, a hundred thousand dollars) bought a "distributed processing" small refrigerator sized machine with a removable 20MB (yes, that's not a typo) HDD, 3 Monochrome CRT "work stations" with built-in keyboards and modified off-the-shelf software for my type of business. Today i could do 10,000 times better for a tenth the cost. My first PC, a NEC notebook running DOS with a thrown in free copy of MS Works cost $1500 and included a 20MB HDD (yup, same as that DEC $100k job), 640K RAM and a monochromatic screen of maybe 12". I have absolutely no idea of the processor.
Today, retired and happy, my needs have changed. From a 15" Powerbook G4 to a MBA first gen 13" to the newest 11" MBA with a seemingly slower processor than my first Powerbook, but 4G (from 1G) RAM and a 128G SSD. And for less money. And, and, and. Incredible how far we've come in such a short amount of time.