Sort of... although I think thin is the expensive kicker here. The Asus eeePC is cheap and - dare I say it - a lot more portable and feature-laden than the Air (removable battery, 3 USB ports, ethernet).
I saw my first eeePC in the wild yesterday. I was impressed, and the girl using it was happy to show off the new toy*, but I was struck that there's no way I'd be typing on it for long. That keyboard is tiny. That's one thing about the Air (not that I'm buying one--my 2005 PowerBook 15" is fine for now) that I really like: the 13" screen and the full-size keyboard.
On another note, I was interested to see how Intel shrunk the Core 2 for the Air - it seems they shrunk the PCB block rather than the chip die itself, which would make shrinking it a lot cheaper overall. Very nice work though - hopefully it'll encourage them to make their chips smaller overall in future.
I agree. While I still haven't seen a nano-itx or pico-itx in person, pictures I've seen show the relative size of the CPU to the rest of the components, and certainly the PCB block shrink would benefit those guys.
*P.S. She was going to put Ubuntu on the eeePC since the stock setup was a bit too much like a PDA. If I weren't already married...