Where are they going? At the moment, I see them where they are. They're great ultra portables that some people need and use extensively. Cheap laptops that if they get lost or stolen, some people won't care about. They're great supplements to go along with a desktop or a powerhouse laptop.
At work, for example, I need my powerhouse laptop because of virtualization I need to do and other intensive tasks. When I take it home, if it comes out of my laptop bag, it becomes a DVD player for my son (until we get him one for Christmas).
At home, my netbook reigns supreme. It's all I need, since most of what I do at home is checking email and surfing the web, and occasionally logging into the VPN at work to fix something. Even at work, I use it extensively when I need to go to a meeting or wander away from my desk, but still need connectivity.
So, I see netbooks still holding the same grip they have now, except gaining more power. They have their place, and unless something drastic happens in the computer industry, I don't see them going away.