Sony announced Vaio UX Micro PC. It’s smaller then UMPC but bigger then smart phone. The UX is powered by a full on Core Solo processor and runs Windows XP Professional. The device also includes Bluetooth, WiFi, WWAN (EDGE connectivity) and a fingerprint reader. Along with the front camera for video conferencing, there is a camera in the rear for snapping pics, and the UX also can plug into a VGA adapter for powering an external monitor. The 4.5-inch screen is capable of a 800 x 600 resolution and accepts stylus input. UX will be out in July for around $1800.
Update: there is a Linux version of Vaio UX Micro PC!