I recently got an Acer Aspire One for my SO as she is working in London a lot so wants something to work on the train and in her London flat.
Its was £180, runs WinXP, keyboard is a decent size (some are a lot smaller than others, so you can get hand cramp), 1GB RAM, 160GB hard disk, and wireless blah, blah, blah. I wouldn’t bother with the solid state disk as the access speeds aren’t great, so you need to put some money back to buy a fast SD card.
I got Windows rather than Linux, as the drivers are optimized for Netbooks to spin everything down to get max life out of the battery (hers lasts around 3 hours or so), also her work uses OWA for external mail access, which works well with IE, and OK(ish) will Mozilla. When Ubuntu gets a bit better for Netbooks I might upgrade it if I can be arsed.
If you want to spend more eePC are worth a look, as are a number of others, but they are much more £ than the Acer.
Worth reading this:
http://crave.cnet.co.uk/laptops/0,39029450,49297248-6,00.htm