My school is purchasing 32 netbooks (Acer's new 10" model) for use as a classroom set. We are an elementary school, so our processor needs are relatively low.
I am excited to get them and start using them. They give more space for students to work, put more machines in the student's hands, and do everything we use more powerful laptops for.
FYI - Most Netbooks come with 160 gb hard drive, so you don't need USB storage.
I have a Samsung NC10, and I love it. It runs Power Point, Firefox (with multiple tabs), and Streaming Music without bogging down. I haven't used it to edit video yet, but photo editing hasn't been too bad.