My fiancee has a 10 inch netbook that she got back in 2008. She only needs it for casual browsing from the couch, and writing email. She's been looking for the right tool for the job for the last few years. She started with a Nokia n800, but she said the browser was too slow and it "wasn't a real browser". Then she got a Viliv S5 (running Windows XP) but she didn't like having to use a stylus. The netbook was fine, but needs to be plugged in now that the battery is old, and it overheats. Then we got an iPad as a gift, which she likes, but she doesn't like that it doesn't have Flash, and since it's the WiFi only version, she has to carry a MiFi around too or tether it to her phone and at 10 inches it's bigger than any of her purses and too heavy to hold for long. I've caught her several times putting it down and picking up her HTC Evo to just browse using that.
I think that if anything will truly kill off the netbook, it will be something in between an iPad and an Evo. Maybe that 7 inch iPad will be it.