While it's far from the runaway success they've been hoping for, they actually did start deploying them
in Uruguay and
Peru just committed to buying a quarter million.
I had been thinking of picking one up in the buy-one-get-one thing, but figured that if I were to get a toy sub-notebook, my money might be better spent on an
Asus eeepc. While there are a lot of innovative features going into the OLPC, I probably wouldn't be able to take full advantage of owning one; being the only person I know with one, I'd miss out on the mesh networking, collaboration features, etc. Charity's great and all, but the success of the project truly doesn't hinge on getting ordinary people to donate one at a time.
(BTW, the picture you have here is a bit outdated. They, unfortunately, dropped the hand crank, and the models going out now look considerably different...)