If it had a 4 GB compact-flash card for storage, it wouldn't even have any moving parts.
It seems like the main computer size limitation these days (at least for low-powered computers) is IO hardware. Keyboards and monitors need to be large, flat surfaces...unless people significantly improve projector keyboards, for example.
I think the niche for these tiny PCs is for embedded controllers... which don't need a keyboard or monitor. Although I'd guess for long-term battery operation (eg in remote applications), 5W is much too power-hungry.
Incidentally, I'm typing this on a eee PC, which has 4GB of flash for storage... also, it runs at 600MHz (slightly faster than the 500 in the article), and webrowsing is (mostly) fine.
It seems like the main computer size limitation these days (at least for low-powered computers) is IO hardware. Keyboards and monitors need to be large, flat surfaces...unless people significantly improve projector keyboards, for example.