I got an XP-based netbook (it was second-hand, at bargain price), tweaked to have 2 Gb of RAM. It was, simply put, a dog: loaded down by the antivirus, the puny Atom processor couldn't litterally do two things at the same time. The puny i945 IGP couldn't run better than Google Earth (to put things into perspective, a 1999 Ati Rage Mobility M1 can run Google Earth with pretty much the same speed an i945 does, same frame rates and effects enabled).
I installed a Linux on it. Thanks to virtual desktops, virtual workspace and faster graphics performance (Intel sponsors the community driver's development), I can now IM, browse the Intarweb, playback movies, USE A 3D COMPOSITED INTERFACE, and even compile a piece of software (just because I can) at full speed.
Enabling power savings gives the same, if not better, battery autonomy than XP did. Boot and shutdown are so fast that, frankly, hibernation isn't interesting to me (restoring a 2 Gb RAM print from disk is no faster than a boot) eventhough Linux does work here, and (even better) doesn't waste disk space by using the swap partition to actually host the RAM dump (while Windows allocates your exact RAM size on disk, all the time, for hibernation; in the case your RAM consumption under XP is typically 400-700 Mb, it's quite a disk space waste).
This post from an MS marketer cites a 1 in 5 return rate: for the Asus netbooks, which had an improperly OEM Linux install (not all drivers were installed, the distribution tested wasn't correctly set up for the hardware, in short it sucked out of the box), that actually was correct. Other models (from makers that went to the length of actually installing and testing their Linux install), return rates were MUCH lower.
Note: on exact same configuration, a Windows XP Home model will typically cost between 15 and 30 more bucks than the same under Linux. Cases where both would cost the same usually entail lower specs for the Windows machine (see Eee 901: installed SDD for Linux was 20 Gb, Windows was 12 Gb).
And it's actually quite hard to find the Linux models: retailers don't have them (not windows, so the staff is completely lost on them), e-tailers can't stock them fast enough.