At this price it should be packing the Atom D510, at least 2GB RAM, Win7 and a keyboard charging dock a-la Logitech DiNovo Edge that has useful ports on it like HDMI, DVI, S/PDif.
18 months ago, these specs were good, if a bit underpowered, and was rumored to be at least $100 less. Today, this combination of hardware can be bested by a modern smart phone, Windows XP is nearly End-of-Life and the costs puts it in direct competition with eeeBox and mainstream laptops.
The form factor is indeed unique and has a lot of potential, but the cost is high and the hardware implementation is already obsolete. Too bad...I expected better from Asus.