These 'minidesktops' are coming up strong on the market, Asus has one that attaches to the back of an LCD screen with a couple screws.
The problem with using a netbook in the configuration with external monitor is heat, to be honest. Better to get something that's built towards that use. And indeed, I've one on order right now exactly for this purpose, with plans on donating my wife's existing desktop as soon as I get it setup.
I have both a desktop and laptop, and bought an Acer netbook with the 6 cell battery and XP. I love it. It’s great for travel and the internet. It’s easy, light weight and convenient to use. I don’t look at it as a real replacement for my laptop, but it sure is fun and easy to use without carrying any weight. I’ve had no problems accessing the internet, checking email or nominal computer use. The keyboard is small though.