I purchased a Toshiba M200 (off lease, through eBay) for under $300 before going in for back surgery. I simply wouldn't be able to use my heavy 15" wide screen laptop after surgery, so this seemed like a real boon to be able to use it while stuck in bed healing. The flip-top laptop has a 2GHz CPU, 2GB RAM, an upgraded 160 GB hard drive, and a 12" screen, but not optical drive.
That was two years ago and since that time, it has replaced a more powerful desktop and laptop (the heavy 15") to become my primary PC for email, web browsing, light web editing or coding, and light gaming. I use the other two when the demands exceed what the little laptop can do. It really excels in a few areas:
1) Graphics: In the past, I used a USB tablet for art or photo editing, but it didn't feel natural - I wasn't looking where I was editing.
2) Notes: It's very natural to fire up One Note (or similar app) to take notes during a meeting. I'm not killing trees and it's easy to organize my notes in my documents. Plus, I can go back and edit the notes after the meeting to clean things up.
3) Browsing: If I'm just wondering around on the web, I'll often go into tablet mode and click through the web. On the rare occasions that I need to type a search term, I'll use either recognition (OK, but not thrilling) or the on screen keyboard (slow but more accurate.) It's a relaxing and enjoyable for me.
4) Pen games: I'm addicted to several pen-based games that are almost impossible to play with a mouse. A crossword puzzle using handwriting (with good recognition) is an absolute blast!
However, it's not well suited to programming, web design, 3D gaming, or other high demand uses. It simply lacks the power for that, so I'll switch to the desktop and other laptop for those uses.
The flip-top (swivel-top? Convertible?) gives me the best of two worlds. I can use it like a standard laptop when doing email and other common office tasks, but can easily convert to tablet mode when needed. Unlike some other comments, I've found the tablet PC to be reliable and well-built. A little care goes a long way, so flipping the screen around at a moderate pace goes a long way to preserving the cables in the pivot.
I'm an IT manager for my department and support several professors who use tablet PCs as virtual white boards and then record the session with Camtasia or other capture software. They then post the work to the class website, so the students can play back the equations at their own pace. It greatly improves student retention of the math work.
Overall, I'm very impressed and use the little tablet as my primary PC. It's not perfect (lacking an optical drive, moderate power, and just 2 USB ports), but it does the job for me.