As a computer shop owner of 8 years here's my take on this.
The large majority of people want a laptop for occasional transportation.
Sometimes from one room to another or for vacations, etc. They don't intend to lug it around every day and long battery life is not the over riding criteria. Plus they don't expect to have to use the entire charge on the battery every day. Most times they are near a plug.
With Windows XP being out so long the cpu's and hard drives, even the bottom of the line, are quite sufficient for normal use. Internet, email and a word processor.
If you add the relatively powerful entry level hardware with some cheap additional ram, the low price laptop is the preferred choice for many, many people.
In fact you are probably better off buying a cheapo laptop, say for 500, and selling it after three years for a new cheapo laptop.
Instead of one expensive laptop for a 1,000 or more you get to replace your cheapo with another cheapo, that will probably be as good or better than the expensive laptop you bought after three years.
If you factor in your selling price on your old one, you save money over keeping a 1,000 laptop for 6 years (if it lasts that long)