Tony Tamasi, NVIDIA Senior VP for Content and Technology, told FUD Zilla that the upcoming Fermi GPU is capable of running an operating system. Tamasi suggested a heavily optimized version of Linux could potentially run on Fermi.
Don’t get all that excited you cannot really run Windows on Fermi GT300-based GPU, but if you would make a heavily optimised Linux it could potentially run on Fermi. So tweakers, this will be a fun task for you.
This answer the question what is going on with Nvidia’s CPU as Fermi is a GPU that starts to get a lot of interesting features of a CPU which will surely help it in the computing world. Fermi won't replace a CPU as “you will need a CPU to run an OS” and this is what Jensen said more than once at Nvidia's GPU technology conference.