I picked up a Benq S6 MID PC for $200 (here in Taiwan, in the states Best Buy used to have it for only $150, not sure if it's still available or not). The S6 is a 5" LCD pen input MID PC (no keyboard) that weighs just under a pound, and includes an 800Mhz Atom processor, 512MB RAM, Windows XP, 8GB SSD, Intel GMA500 chipset.
The newest Flash beta, 10.1, supports hardware acceleration for the GMA500, and I'm happy to say that Skritter actually runs pretty quickly on the S6 with the new Beta!
Here's a youtube video I shot with my iphone to show a quick demo of how the site runs on the S6:
http://www.youtube.com/watch?v=2VgVAtgO6Q0
For the most part I can write as quickly as I can, although the framerate isn't always 100% smooth. As you can see, the glow effect at the end of drawing a character always causes a stutter as well - that's probably the major annoyance I can think of, and it would be great to have an option to turn this off. But for $200 I'm certainly not going to complain - I came this close to spending $800 on a used Wacom Cintiq tablet to hook up to my Mac.
If you wanted to step up to something a bit faster, for $500 you can pick up a Viliv S5 with a 1.33Ghz Atom processor (and everything else pretty much the same) that should improve speeds. But to me the extra $300 isn't worth it.