I'd say that you don't sacrifice much usability when switching to linux, since there are alternatives to just about all the windows apps excepting games. Most of the really neat things on Windows like Photoshop and the like don't have good alternatives with all the easy to use features, but alternatives are there. As far as the usefullness of netbooks goes, they aren't really meant for much more than word processing and internet browsing, which linux provides very good alternatives for those, (most of which will actually run on windows too).
Most of the internet already runs on linux anyway.
And yes, I've heard of the other ubuntu variants, and they are a bit better, but instead of the likes of Kubuntu I would use Mepis, which actually shares ubuntu innards but is designed with K interface in mind so it's slightly better for that. (I admit, I'm not familiar with Xfce or Fluxbox desktop environments, I'll have to check them out.)