Lots of these small laptops around - Sony Vaio have been doing them for years but are horribly expensive.
The new breed of ultra portable laptops are often called webbooks, or netbooks, because they are perfect for browsing the web on the move. They often don't have the hard drive as we know it, but a solid drive as found in a flash drive or memory stick.
Very often they use Linux instead of XP - it helps keep the costs down, but most manufacturers offer a choice of user system.
Currently, Asus, Acer One, MSI Wind all have good reviews but LG, Toshiba and Dell are due to release theirs on to the market soon.