I have used a netbook for development. It is not very fun. The main problem is the screen resolution - 1024x600. This ensures that a modern IDE will not fit on the screen without hiding the most useful parts. For example, when you compile code, you will not have enough room on the screen to view your errors and code simultaneously. (Or rather, you can, but it is frustratingly very cramped).

So, I use Notepad++, auto-hide the Windows taskbar, hide all of the toolbars, and reduce the font size. Now it is usable ... oh wait, no it isn't ... the screen resolution is still a big problem. What about when I want to ... view a help file? Compile/run my code in another window? View a website? First, there is almost no room on the screen to put two windows side-by-side. (It can be done, but they have frustratingly small widths.) So, you have to manually switch between applications all the time. And you soon find that it gets old fast, especially since the taskbar is necessarily auto-hidden.

Another item (at least from my 1-yr old netbook): Netbooks are staggeringly slow at playing web video - high-res video on youtube is not watchable.

So, I do not recommend a netbook for development. For basic web browsing, a netbook is awesome. But not for development.

EDIT: These are based on my experiences with a 1024x600, no HD-enhanced netbook. There are new models out now :)