^ True, but such a small screen won't do your eyes any wonders.
DVD size movies will have to stored externally unless you acquire a reasonable size hard drive for the netbook. For divx, I am uncertain but I recommend you use Xvid, as it is more widely supported by Linux due to its less propitiatory nature.
Linux in the EEE pc is a must if you want fast speeds.
Linux has many music players. None can actually replace the itunes + ipod + istore combo. The new intel chipset, lowers power consumption and the dual-core increases it. The Dual-core is only marginally more powerful thanks to non-linear core scaling.
I'd wait for the new chipset. The ability to increase battery life and have a cooler passive heatsink will greatly benefit you.
I've not seen the packaged distro avaiable although under the GPL it should be possible. To be honest the basic OS is so hidden behind the applicaiton launcher skin they put on it you would not learn much anyway.
Ubuntu has a couple of nice derivaties available that are designed for the eee. You can have a play with those as live CD's although it's not what comes with the machine.