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I do have what is effectively a netbook - a Sony Vaio SRX-77 with a 10" screen running ubuntu, that I tried out some time ago before switching to a mac, but the keyboard and screen were just not comfortable and deterred me from using it.
I think what's driving netbook sales right now is the crapass economy worldwide. People want laptops but they can't afford the regular ones currently so a netbook will do. Either they don't need a computer for anything much more besides web browsing these days or they're deluded as to how much can be done with a netbook. I think how relevant netbooks remain will depend on if the economy continues to limp along (which it appears like it will). But if they're able to drive down the prices of the small regular laptops, then more power to 'em.
On the other hand, I do regularly use them through external monitors for longer stretches. Right now it's through my 32" TV, which admittedly does help!
I also agree that the netbooks key element is that they're cheap. However, the value proposition (for me at least) if one were to look at cost v. usage time - even if I had paid $400 for my fujitsu, I've already seen more value from my Air than I have with the Fujitsu.