Tiny Full-Features PCs seem to get traction. We reported about the orange-sized T-Cube and IBM's Palm-sized PC.

Mini-ITX announced the world’s first Nano-ITX based digital entertainment device - the "Nanode" - created by Hoojum Design.
The Nanode is designed around VIA's EPIA N-Series Nano-ITX Mainboard.
The 120 x 120mm Nano-ITX boards use the highly efficient penny sized VIA Eden-N processor running at speeds of up to 1GHz and VIA's CN400 digital media chipset with integrated hardware based MPEG-4/2 acceleration and advanced video rendering techniques. The boards deliver a compelling visual experience on all display types from CRT and LCD screens to standard definition TVs and HDTVs, accompanied by crisp clear 6-channel surround sound from the onboard VIA Vinyl Audio Six TRAC controller.
More Details on Mini-ITX and BIOSMagazine.