Lets do it with stuff we can get and see what happens:
Main Board: (truly open, schematics and all) : http://beagleboard.org/ ($149)
Screen : Lilliput 8" 1024x768 touch screen (http://www.case-mod.com/lilliput-809gl80npct-lcd-touch-scree....) ($259)
Network : 802.11g wifi (http://www.usbgear.com/USB-Wi-Fi.html) ($30)
Battery: 7.4v LiIon 5200mAh (4 hours run) http://www.all-battery.com/index.asp?PageAction=VIEWPROD&.... ($50)
Case: Injection Mold plastic (http://www.emachineshop.com/molding_machines/injection_moldi....) ($10)
Cost to build a single one, ignoring volume discounts and cost to assemble: $498.
I still think the price is going to end up being around this. You could actually go and make this today. It would be cool if someone were to just throw up an instructable and a compact flash image of the OS for the beagle, then we could all go make our own. Someone could design a nice plastic case and have a bunch made (or just have emachineshop hang on to the molds) so they'd be cheap for all.
http://news.ycombinator.com/item?id=252996
The site that sells the touch screen says "down for maintenance" right now though...
I also liked the idea of using an eeePC and using a $60 touch overlay that one can get easily on ebay. Google "touch screen eeepc". Many people have made some very nice looking modifications in this regard.