The only real problem comes with pushing pixels around, as the other reply mentioned. I can watch QT video fine, but if I go to Vimeo or YouTube, I can't really get a good playback out of Flash. Generally Flash is bad on this machine. I'm a long time Mac user so I'm not too unused to this, but it seems a little worse than on an iMac or something like that.
I think if you use an IDE for dev work you should check it out at an Apple Store or something to make sure the resolution works for you. That's really the only thing I'd consider. My 11'' is really just too small to me, having been spoiled by dual 30''s on my desktop. If you use a text editor or vim/emacs it'll probably be fine, but IntelliJ or Eclipse or whatever just have too many windows to manage in the space, in my opinion.