I thought I'd share my experience with running XBMC on a basic netbook since i couldn't find too much info on this when i was researching.
I was looking to purchase a netbook for simple web-browsing as well as to use it for viewing DVD's and listening to music. My concerns were whether or not the Intel Atom processor with the Intel GMA 950 graphics could keep up with the processing that XBMC required.
I ended up purchasing a gateway lt2032u which has the N270 processor and 1GB of RAM. I'm happy to report that this machine is able to run XBMC like a champ with the Confluence skin. I rip my DVD's to iso, and XBMC is able to play them back without a hiccup on this machine. This netbook has Windows 7 starter on it.
I'm not sure how it would handle HD content, but for DVD viewing in 720p, it works great.