The Mac Mini does indeed seem to be a "gateway Mac" aimed at PC users who've really dug their iPods but who haven't made the jump to the Mac platform yet because of the largely-psychological cost barrier. The base-model Mini is, after all, only $100 more than a high-end iPod.
Speaking as a person who does mainly PC tech support for a a school the size of a small city, I believe the Mini has the chance to do very well for Apple. Spyware and viruses are a real plague for PC users. I've had many, many calls from frustrated students and faculty who've caught one of the variants of the CoolWebSearch trojan that must be removed by the hard-for-novices HijackThis ... or worse, can't be removed at all.
Macs don't have any spyware or virus problems to speak of right now. That alone should be a huge selling point to non-geeks who need a computer that simply works and for which the Web isn't a minefield of hidden dangers. And Mini sales could triple or quadruple Apple's market share before your average money-grubbing spyware hack will believe that the plaform is worth coding malware for.
A Mini with a copy of Virtual PC can do most anything your average student or faculty member needs to do on his or her computer. Virtual PC on a Mac has the advantage of acting like Petri dish -- if something in it goes horribly, horribly wrong, you just dump it and start over, without having to lose a lot of time or data.
But the Minis are highly attractive to existing Mac users who have been seeking a small portable, so it's not merely a gateway for the PC folks.
If you've been a computer user for any length of time, you've already got extra mice and keyboards and monitors lying around. The Mini weighs two pounds less than the smallest iBook, fits neatly into many carry bags made for external CD burners, and costs several hundred less than the least expensive iBook.
And the new Mini costs less than many used Macs that have a fraction of the hard drive space and processing power. Used 600MHz iBooks with 20GB hard drives and half the RAM sell for $499 at many stores -- the same price as the 1.25GHz Mini model. On Ebay, you will be hard-pressed to win a 4-year-old firewire clamshell iBook for less than $350 after you factor in shipping and fees.
So if you wanted a portable with firewire (dead handy if you want to boot it in target mode to easily transfer files between computers), why not spring the extra $150 for a brand new computer with a warranty?
If you add in a $20-$50 USB-compatible KVM switch from your local computer store, you don't even need an extra monitor; you can run the mini on your existing monitor at home, and then take it to work with you to do the same thing.
The petite size of the Mini makes it ideal as a media server to hook up to your TV and stereo system. You can easily dock it to most any existing system with a DVI-to-video adapter to serve up music and movies, surf the web, and play World of Warcraft.
If you wanted to lie on the couch and remote-control your Mini along with your TV and stereo, you don't even have to spring for Apple-installed Bluetooth. MacAlly's KeyPoint is a small wireless remote you can plug into your Mini's USB port and has programmable buttons you can use to control iTunes and the Mac's DVD player.
And, as SharQ pointed out to me, many people who are seeking to customize their automobiles have noticed that the Mac Mini is approximately the same size as the ISO car stereo. With the proper cooling and cabling combined with a small LCD, the Mini could provide an instant in-car computer.
So, yeah. The little 6-by-6 computer has a lot of potential. Does it have downsides? Certainly. The Mini's innards are advertized as being not user-servicable, not even the RAM. However, if you've got steady hands and a clean putty knife, it's a fairly simple procedure to get the mini's cover off. The Mini's hard drive is too darned slow for pro and semi-pro videographers yearning for a portable to take with them on shoots. There's heated debate over whether or not the Minis' graphics cards are powerful enough to run Tiger, the future incarnation of MacOS (presumably, it will run Tiger fine; tweaking Tiger might account for its delay in getting to market). And even the fastest model of the first-generation Minis won't be able to run DOOM 3 when it's released for OSX soon.