I spent this past weekend with my Mom as she celebrated her 80th birthday (we Sellers have good genes, so you may be stuck with Yours Truly covering the Apple industry for another 30 or so years). I used the MacBook Air fairly extensively over the weekend, writing articles, checking my email and doing a little web surfing while Mom went to her skydiving class. (Well, okay, she doesn't take skydiving classes, but she does stay busy enough that she can't just it around and talk with me all weekend).
Despite "merely" having a 1.6GHz processor and a 4200 RPM hard drive, I didn't notice any appreciable sluggishness in use. In fact, for basic computing tasks the MacBook Air works just fine.
And the laptop is as gorgeous and techno-lust inspiring as you've heard. You can't appreciate its svelte design and engineering brilliance until you've spent some hands-on time with the MacBook Air. I had siblings, nieces, nephews and others ooh-ing and aah-ing over its beauty.
That said, I wouldn't use the MacBook Air as my primary computer. The 80GB hard drive will fill up in a hurry if you're using it for iTunes or iMovie editing. However, it makes a great -- but, at US$1,800, expensive -- companion piece for another Mac. Apple's not, as far as I can tell, marketing it this way, but that's the MacBook Air's logical niche.
With that in mind, I'm predicting the world's thinnest laptop will be a hit. It won't be as hot a seller as the MacBook or even the MacBook Pro, but for those who can afford a sexy secondary Mac, it's got a lot of appeal.

One final thing: I also played around with the superdrive that can be purchased as an option for the MB Air. It works fine, but, despite what seems to be a logical assumption, the black Apple logo indicates the bottom, not the top, of the superdrive.
Just don't ask me how I know this.