What is the smallest machine that one could use for Drupal development? Do you need a laptop? No. The Nokia N800 Internet Tablet is enough, or to be more exact, will be enough once SQLite hits core. PHP (with preg and ereg engines and with SQLite) and lighttpd is compiled on maemo (the Linux distribution N800 runs) and they work together nicely. The speed? From very basic benchmarks, it's 5-10 times slower than my 1.1 GHz Intel Celeron M CPU (Intel Core based). So you would not do real webhosting on it, but it is on par or even faster than an Intel Pentium I. Not too shabby from a 200 gram machine... grab a ThinkOutside Sierra foldable BT keyboard to go with and you can have your full Drupal development environment in your pockets.
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I know a guy who is using this device (I think) for a home automation project. It has a 486 system on a chip.
Last I checked (more than a year ago), it runs Linux from a CF card, and he was able to get Apache, PHP and MySQL running on it.
This is not the memory limited true embedded Linux like the smaller ARM based systems (Gumstix, ...etc.)
So running Drupal on it is trivial.
And then you need a screen. The Nokia has a 800x480 screen.
This is the one that he uses link.
For a server, who needs a screen? But yes, I know what you mean.
The N810 can run it.