Yep, i'm always amazed at people these days thinking wi-fi is the be all end all...
For students at most major universities, fast Wifi is almost everywhere. For business travelers it is pretty darn accessible as well.
As a student, the Macbook Air looks pretty good to me. I sold my 12" Powerbook because I never took it to any classes with me. It was as big and heavy as the other 2-3 textbooks and notebooks I carry with me on a daily basis and added a lot of bulk to my bag. This is a serious improvement in size and form factor.
I could see the MBA, a Time Capsule (for extra storage in the dorm), an iPod (lets face it 80 Gb will get filled up pretty quickly when ripping music and movies), and maybe a flash drive being a pretty good solution for a student on the go.
If you need a dedicated video card or more Ram to edit movies, photos, etc. get this in conjunction with an iMac, Mac Pro, or PC.
Finally, if you want to play games there is no ultra-portable that will work for you anyway. Get an Xbox 360 or Wii and be happy that you won't be spending endless money upgrading every six months just to play the latest FPS. Spend the savings on beer and women instead.
Cost wise, this shouldn't be a problem for the target audience, which I assume is students, sales people, and execs who aren't tied to an exchange server. Tuition at many public Tier 1 universities costs double what this costs per semester and this is a tool that many can justify purchasing. For office documents, light media, and internet on the go it is perfect. Tons of students at my school already have iPhones which costs more once the subscription fees are added in.
Personally, I'm tempted to wait until next year and see if the SSD upgrade gets a price-cut to $300-$500 more...When this thing is all solid state in 2-3 years it will be a phenomenal laptop. Hard drives are the most common thing to fail after all...