I finally got my eee PC last saturday. It's the 4G Surf in Galaxy Black .
Everyone says the same thing, and so do I: you can't understand how small the thing is until you see it.
And then everyone takes a picture of it sitting inside its previous notebook. So will I, 2 times.
Here's the eee with a HP Pavillion zd7000, which has a 17" widescreen:
Here's the eee with a Toshiba Satellite with a very unusual 16.6" 4:3 ratio screen:
But is it the smallest notebook I ever had? Nope.
Here you can see the eee, a Toshiba Libretto and a HP Jornada 720 laying over the HP notebook, so you can get an idea of how much smaller all are. The Libretto is smaller but thicker and feels heavier.
Regarding construction quality, the screen is decent, if you can live with the low resolution (I can). The keyboard is ok, even though I have large fingers  and the general construction feels good (not creaky, no flex ), but nothing remarkable.
The software... it works. But I am loooking to replace it with another distro ASAP. Let's get into some detail...
Xandros package availability is abysmal. There's little, what's there is old, what I like is usually missing, if you start pulling Debian packages it will break, and if you don't want to use the Xandros File Manager you may have to do evil stuff 
KDE 3.4 is worse than 3.5. There's no kopete?
The menus are incomplete (in both the simple and advanced modes). There are a bunch of things installed but not showing.
If you have only 4GB of storage, little RAM, and a slowish CPU, building from source is probably not a good idea, so I can't install that way even if I felt like it.
No PyQt4? That means I can't blog from it :-(
On the other hand, everything in the eee works using xandros, and I don't know if it will on another distro.
The only changes I made so far are:
Switched to full desktop (KDE) mode.
I got rid of the silly unionfs situation (BTW: I did it using the instructions at http://wiki.eeeuser.com, but used RIPLinuX as the USB bootable distro, it's the easiest of them all)
I removed a lot of garbage (got 2.2GB free now)
Moved logs to a tmpfs
Other than that, it's still the original stuff, and I have been using it to work around the house while watching the baby, and from bars, and such.
Happyness-meter: 8 out of 10 so far.