So actually just used it at a best buy. I must say, while its far from ideal its definitely in a product I could see catching on. Very very nice size. Feels even snappier than the iPhone. Apple continues to provide possibly the most responsive touch screens I've ever worked on. The Ebook interface is nice and the keyboard isn't bad for a touch environment.
In no way could this thing be a laptop replacement, but I could very easily see this being a portal media device for casual people who simply want something to pick up around the house or if they go on occasional trips.