The Economist (my favorite rag) has a scorching review of the OLPC XO that unfortunately is 100% right in all of its criticisms. I feel terrible for all of the people that I helped convince to pitch $400 down the drain on this thing; it is slow, buggy, and almost entirely unusable by people with advanced degrees, never mind small children. That said, I don't feel nearly as bad for all of the 1st world kids who've had their Christmases ruined by this plastic paperweight as I do about the kids in the third world whose governments are going to be bamboozled into buying XOs.
I remember having written about the OLPC before so I went back into the archives to see my very first post which was on Negroponte's announcement of the project at the 2005 D Conference. Apparently I was bamboozled as well and should have stuck with my first instinct.
The OLPC's software is just horrendous. The Etoys environment which I was so excited for is too cramped, too slow, and not at all simplified from Squeak Smalltalk. The browser is almost unusable, and the music application has such incredible latency between doing anything and hearing sound that you're more capable of controlling the noise the machine makes by waving your cellphone in front of it. Just about the only decent thing for a 5 year-old to do with it is to play the memory game or to practice typing in a word processor that makes Word 5 for the Mac appear supersonic (and tends to crash).
In fact just about the only thing you can do well with the laptop is drop it— which is good because I promise that after a couple of hours with it, you'll want to test its resilience to impact.
The OLPC foundation would do better using its clout to buy Eee PCs and tweaking what is a much more usable system overall. Or even getting old laptops reconditioned and re-imaged with stripped down versions of their original operating systems.
As always, Fake Steve says it better than I could.