The display is color. In the lowest brightness setting, it reverts to black and white and remains mostly visible in sunlight (it's visible in sunlight at all brightness settings, but the colors don't come out well so there's little point in wasting battery and not turning the brightness all the way down).

You're right about the keyboard and general lack of resources. I purchased one for myself and am finding it very difficult but possible to touch type, but I do enjoy the placement of the Control key (to the left of the A; there is no caps-lock). I had to do quite a bit of work to get everything set up with "normal" window manager, xterm with readable fonts, browser, etc (note that the default sugar interface includes all of these, just in a different form than any Linux distro); I'm planning on using it as a conveniently portable development (often via ssh) workstation. (I've heard similar complaints about the Asus EeePC keyboard, but that is not exactly built for children so presumably its keyboard is slightly larger.)

I've seen many Give-One-Get-One participants say they purchased it as a gift for their own child or niece. This is the obvious market for the OLPC in its current form were it to be sold in retail stores. The question is, does it make a good laptop for children in wealthy areas who probably already have access to a computer and Internet? It certainly includes a lot of neat software, but is somewhat sluggish. I don't know any young chilren, and I've no idea if the laptop makes a good gift or not.