I ordered one of these for my mum's birthday, going for the Linux version over Windows XP purely for the difference in price (I can always install XP later, a fairly simple task for me). The machine was booted up and on the internet within about 3 minutes, which is the fastest out of the box set up I've ever seen.
As far as software goes, it has almost everything you need for web browsing, msn, email, documents etc, and the interface is easy to use. I would say that it needs Skype and a different media player installed (the pre loaded one can't play DivX encoded video). This is where the choice of operating system is important - if you are NOT technically minded, familiar with Linux, or don't have someone who can install new stuff for you, GET THE XP VERSION. Installing new software on the Linpus Linux is a pain, generally requiring use of the command line, and I would say that the version installed by Acer is aimed at people who don't want to do much more than what the present applications cater for.
The hardware is lightweight but feels fairly sturdy, and looks really nice too. The keyboard is fine for every day use, but the trackpad may take a little getting used to as the buttons are situated at either side rather than underneath. The screen is crisp and clear, no dead pixels, and the VGA output still looks decent on my 32" TV. The built in camera and mic work great (tested with Skype), and the speaker sound quality is fine for general use although a little lacking in bass (remember, it's a netbook!!). My only real gripe would be battery life - the 3 cell battery provided only lasts for 2-2.5 hours, but it also charges up pretty quickly.
Overall I'd say its a great little machine, very cute and dinky looking, incredibly light weigh, easy to use and definitely suited to its purpose.