The company Marvell posted a press release, unveiling their new product design: it's called SheevaPlug, and it fits a Linux OS (Marvell stated that SheevaPlug will support, "multiple standard Linux 2.6 kernel distributions.") into a device the size of the average wall plug.
This new creation is quite a unique one; it sports a 1.2GHz ARM-based Sheeva embedded processor, 512Mbytes of FLASH, 512Mbytes of DRAM, gigabit ethernet as well as USB 2.0 port, and all you need to do to get it running is plug it into a wall. Unfortunately, Marvell's announcement is only a design reference, but other companies are making products based on the design, with a device called the PogoPlug coming shortly. This could lead to some interesting possibilities, as one could simply buy a 4-way power jack and have their own mini-server farm.
A drawback to the system is storage, but you can't expect a device that size to have much of it; thankfully, with the USB 2.0 port included you can connect a storage device of any size you please, which still would save a lot more space and power than having a full PC.
Marvell has said that the SheevaPlug would use less than 5 watts of power, and if you wish to get developing for devices based on the design you can purchase a development kit from Marvell's website for $99, but you may wish to wait until actual products are released.