AnandTech had the opportunity to test AMD's 18W Zacate APU and reports the chip delivers GPU performance that's about twice as good as Intel's Core i5. You can check it out over here, the report also includes pictures of the Zacate test platform.
AMD confirmed that we'll see hardware ready by the end of the year, with systems going on sale in early Q1. We may see mini-ITX boards at some point but initially the focus will be mainstream netbooks and notebooks priced at ~$500 all the way down to value netbook segments. AMD also promised 8+ hours of battery life on some of its designs, however that's a MobileMark figure - load use would be lower.
The performance is extremely promising. If we see this sort of graphics performance in a netbook, I think it may just reinvigorate the form factor.