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Netbooks are fine for most casual users. Word processing and web browsing doesn't need insane CPU or GPU power. If you plan on doing any gaming or watching hi def movies that require some graphical power, you'd probably want to step up to a regular laptop for the extra power.
As for netbooks, the biggest limitation I've had is with the low resolution (seems too limiting, and pages don't display all that well on an 800x600 screen anymore) and somewhat strange keyboard layouts (like my 1st gen Lenovo S10)
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