I've got the MBA 11 Base + 4GB RAM. I went to it from an older 2.0 GHz Dual Core MB with 3GB RAM.
I wasn't sure if I'd miss the [barely] better processor or not, but so far this has been a lot better than what I had. I haven't noticed any problems doing mild Photoshop or watching 1080p videos with it at all. The only time I recognize it being slow is if I'm converting video in Handbrake, which it handles fine it just takes forever (not that surprising or that big of a deal).
The way I've handled the smaller storage is just by keeping my SSD cleaned out as much as possible. I keep my music and photos on board and everything else on a networked drive, which is fine and dandy.
Basically it comes down to what you are using it for. I'm a student and I love it just because it's so easy to grab it with my books and not look back.
The three things I'd change are the SSD size, add an SD card slot, and double the battery life. 5 hours isn't bad and with the display on the dimmest setting it will last that or for a little longer, but the iPad spoiled me with the 10 hour battery life. I guess with something this portable it'd just be nice to not ever hardly have to drag the power cord along for the ride.
I wasn't sure if I'd be able to handle an 11 inch, but it's definitely not even a minor problem and I wouldn't think of going with the 13 if I had to buy another Air tomorrow. That said, the three problems I've listed are all cured by the 13 inch.
If you decide not to buy until a few months down the road, maybe the next revision will be out and those things will be upgraded on the 11.
Anyways, love the 11 even if it is my only computer.