Tom, I fundamentally agree with you completely and would probably never buy a netbook myself. But, if someone were to only need a tool to browse the web and only used web apps, the netbooks are a cheap way to get there and some of the netbooks do come with higher-res screens.
On the other hand, you can pop for about twice the price and get a reasonable Win 7 Home based laptop. If you have any apps that you want to install and run such as Word or Excel or the like, this is the way I'd go.
Bottom line - it all depends on what you want to do. For a casual user who wants to keep price as low as possible, I would recommend a netbook and advise to only use Web-centric apps and avoid downloading additional apps. Most everything a casual user needs is out there in the cloud these days and, to be honest, it's a lot easier to maintain and troubleshoot a netbook that is only used to run a browser.
Then there's the Ipad... hmmmm