It has the resolution. 720p means 1280x720. My current laptop doesn't cut it for full frame-rate movies, but the laptop should do more than fine. And yes, you can play HD on sub-12" screens; another reason I'm looking smaller rather than bigger is that the 11.6" models have the same screen resolution as quite a few 15.6" models; 1366x768. 720p is actually not HD, but the EeePC skips around a bit too much.
For this PC, it's a combination of five issues; 1024x600 resolution, slow processor, and not enough RAM, ran out of storage space, and the little fact that even Linux is a bit... slow... on it. Dropping even $40 into a 2GB stick for this PC? I think it'd be on the verge of a waste, because I'd still be stuck with all the other little issues. And as for what I do on campus? Play a few games, surf a bit of internet, and occasionally Wikipedia something. This little laptop can do most of that, but only just barely. I'm not looking for a mobile supercomputer; just something small and light to replace this for daily duty. With better battery life.

I don't carry around my charger on this little laptop for various reasons, though the main one is because of how I have my desk wired. With a <4hr battery now 18 months later, I am getting rather annoyed when I have >4 hour days of class. I have an 8-hour day, a 6-hour day, a 4-hour day, and finally a 2-hour day. At least two days a week I'm out of battery early, the third depends on how long class runs (commonly end up with a dead battery), and the last is just fine.
To be honest, I'd like to make this more into a
music-center PC. I have an external 320GB drive (another reason I want a "real" laptop) but it's rather useless on the go, considering the fact that it's a 3.5" drive and uses a wall wart. For what I do, an LCD and a tiny mITX (S775, a dual-core, and 2-4gb RAM with nVidia IGP) system would work just fine, but I don't have space for an LCD right now. Plus, it'd make my mom infinitely happy to hear that I am fully mobile in 2 suitcases, a laptop bag, and an armful or two of audio equipment (two "small" full-range loudspeakers and an amplifier). Do you have any idea how easy that is to pack into a car? How easy that is to slip a more-capable laptop into a bag and fly internationally or cross-country? I'm looking forward to the future with the system; a few weeks to a few months in Europe this summer and then going into law school a year after that. Come December 1, I'll officially be a Junior (at age 18).