I believe Jeff Atwood authored the definitative post on the subject:
Coding Horror: The Programmer's Bill of Rights
...Jeff's post is the best outline for developer productivity (and morale) enhancement I've seen. And it's not just the what but the why, which helps make the business case for the investment required. Take this post to heart when selecting computers for your developers.
The netbook does have its place in the workplace, just not as anyone's primary workstation.
The upside is portability and price. The downside is productivity and performance.
A netbook is best suited to casual web browsing on the sofa, at the coffee shop, or while lying in the hammock in the back yard. It also can be useful as a business traveling companion; it fits nicely on the tray table (even when the guy in front of you decides to recline and take a nap) and, once you get where you're going, it works fine to connect to a projector for PowerPoint presentation client dazzlement (though you won't want to author your presentation on one).
A netbook can be an acceptable Outlook client (though the screen is a bit small even for that) and can capabily run Office applications. Most likely you'll only use it to reference existing documents or make minor edits.
You might even be able to get by with Outlook Anywhere (formerly OWA) and the free-to-download Office document viewer applications if you only need to reference documents (and pinch pennies).
None of the netbooks I've seen have a true docking solution; VGA and USB is all you get.
Key things to look for are memory expandability (some come with 1 GB and will accept no more), screen size (some are just too small to be useful), and a six-cell battery (that should get you at least 7 hours unplugged). Keyboard quality and size are also important if you expect to do anything other than web browsing (even a quick email response can be frustrating on a cramped chicklet keyboard). No optical media, so you're stuck with the in-flight movie (does anyone still do that?).
All portable computers are an amalgamation of compromises; understand the trade-offs. David Pogue of the New York Times does his take on the netbook as "Mr. Compromise" (video).
I picked up an ASUS Eee PC to play around with a few weeks ago. My primary interest was for casual use around the house and when traveling. I upgraded to a 2GB DIMM and have Windows 7 RC and Office loaded. I find I use it more than I expected (the whole family does), but I certainly wouldn't want it to be my only computing device.