Jumping from 1.6 GHz to 1.86 GHz won't allow you to use the Netbook in any different way. It will still be too slow for games, encoding etc., and it will still be fast enough for basic office work and web browsing. I'm kind of surprised they don't even use the 1.86 GHz chip in some of the overpriced $700 "netbooks" that are available, though. The profit margins on those must be huge and a slightly faster CPU might convince a few more idiots to pay that much money for Pentium-M 1 GHz-class performance.
Once Atom gets graphics, memory controller etc. integrated on-die, people will find it makes more sense and differentiates itself more from other mobile CPUs. The current Atom is really just a proof of concept. With the chipset drawing many times the power as the CPU itself, it's no wonder people look at other solutions like low-end Athlons or the Via C7.