Have you read this? It appears that Ubuntu is going to be the first major Linux distribution to release a version designed specifically for the subnotebook market. Nothing concrete yet, but will be very interesting to see what comes of this. Although there are other Linux distributions aimed at ultraportables such as the Eee PC, they're all community ones like PuppEee or EeeXubuntu. Ubuntu Netbook Remix is the first one that's actually produced by a major Linux distributor.
I'm willing to bet good money that not only can Ubuntu produce a great OS for subnotebooks long before Microsoft can, but that other Linux vendors can too. Furthermore, Microsoft won't be able to match Linux on performance, not at least without tearing out huge chunks of Windows XP, probably crippling it in the process, and will really struggle to turn a profit in this field. While it's naive to believe that Windows won't gain some market share of these computers, it does look like Linux is going to be the dominant OS for these computers, and Apple are unlikely to get involved.
I've already seen plenty of people brandishing Eee PC's around Norwich, and Asus are churning them out as fast as they can and still can't keep up with demand. It's looking increasingly likely that instead of the fabled Year of the Linux Desktop, 2008 may be the Year of the Linux Ultraportable. We certainly live in exciting times!