My 12" netbook does every programming task I need it to do quite comfortably. This includes running Eclipse, Apache, multiple Rails servers, etc.
The keyboard is very close to full size, minus the number pad, and is easy to type on. My one gripe about my particular model (an Asus 1201PN) is the annoying trackpad and buttons, but it's tolerable.
If it wasn't for the limited CPU in it, it could easily be my main machine.
edit Though my netbook is not the super-super cheap variety... I have a feeling they would struggle.