Microsoft says if they're going to continue selling XP Home, then the system can't have more than 1GB of RAM. Also, HP only pays like $15 for that copy of Home and Microsoft is kinda ticked about XP even still being sold, but they get it with Netbooks, hence everybody compromising a bit on something. Intel doesn't make much money. nVidia doesn't make much money. HP doesn't make much money. Microsoft doesn't make much money.
Anyway... since XP COAs aren't distributed, thecnically, you can get a Win7 Upgrade disc for the Mini 311, but it'll not actually be an upgrade. It'll be a clean sweep. Also, the "free" upgrade costs a small fee for transaction handling and shipping.