The market hasn't been huge historically because the machines were very expensive. A friend had a beautiful Sony Vaio years ago, it was tiny and compact and it cost a lot of money. Specs seemed to be more important then too, it was all about mhz, ghz and gb's. Perhaps the market has changed -people like the form factor, but aren't expecting a supercomputer for a low price.
I think a lot of that is that people aren't expecting them to be 3D game machines as the screen/interface is too small for real immersion, but any bargain machine today is capable of running office apps, email, and basic games like bejeweled just fine.
I wonder how one with a cell card and bluetooth that's somehow setup that the machine can still be mostly off but still allow you to voice dial using a bluetooth headset. Computer in the backpack, nice huge battery, just do the gabbing on a nice small headset that doesn't need a hand to stay.
I currently have a huge laptop that CAN sorta game(it's old at this point), and I'm seriously considering something like this - I don't need anything too complicated, but the ability to play DVDs, maybe even blue-ray, basic games/timewasters, email and surf. Oh, and lighter with a longer battery life.
I'll game on the monster tower at home. People who want one portable machine can go slightly larger.