I now own 2 laptops (one running XP and one Ubuntu) that have completely replaced by desktop PC. I now no longer even own a desktop.

Given time, I think smaller PC's will inevitably replace laptops. However, it'll take the hardware becomming equally as powerful. For example, I can do all my programming owrk (fairly CPU intensive) on my windows laptop, and still play World of Warcraft, Company of Heroes, Halflife Source, and other 'modern' games on it. The CPUs and video cards got that good, making it a viable desktop replacement. Theres nothing a desktop can do that a laptop can't any more.

My 770 hasn't even begun to replace my laptop, and here's why:
-speed / slow processor
-too small of a display for some practical purposes (i couldnt imagine coding on it when only a few lines of text fit on a display)
-lack of 'office' practicality. This is actually more of a Linux complaint. My workplace uses MS Office and Exchange/Outlook, and there simply isn't a replacement that will run on the 770 that is 100% compatible with MS Office.
-lack of software. currently I can't just go grab 'anything' and run it. This is due to the ARM processor of course.
-web browser. As good as the MicroB engine is, it still doesn't do everything that makes the web what it is. No java support, and some of the other 'flashy' stuff doesn't always work.

If all those obsticles were overcome, then my IT would go a lot further toward replacing my laptop. Till then, I still pack both, and find myself using the lappy much more.