I think it's Intel's marketing requirements that have destroyed the low-end laptop market.
I'm using a Lenovo S12 to type this. I got it for about ~$325 (a refurb, direct from Lenovo - http://outlet.lenovo.com They don't seem to have any more.). It's sort of a hybrid - an Atom box, 2 GB max, no optical drive, but a quasi-full-size keyboard and a 1280x800 screen. (They keyboard and screen and price were my main requirements.) It's got ~ 4+ hours real-world battery life.
At the moment, Lenovo has a 15" 1280x800 and optical drive notebook for $429 (dunno how expandable the RAM is), but they are short on machines for less than $500 unless you can tolerate a 1024x600 screen.
I've got an old, similarly-sized (slightly smaller) Fujitsu 7120p with a optical drive, but I never use it. I don't think optical drives are very useful anymore, myself. Thumb drives have killed them, mostly. And if you have to have it, you can get a USB optical drive for very little money.
J still uses her Hackintosh (Dell Mini 9). It works pretty well - we haven't noticed any major speed issues, but she mainly uses it for web stuff and the occasional PPT presentation.
If it weren't for Intel's marketing requirements, I think you'd see a lot more variety in the netbook/laptop space. I think that Intel's not going to be able to hold back the tide too much longer, with the ARMs coming, the FTC after them, and so forth.
FWIW.
Cheers,
Scott.