Office (and related apps) don't demand shit in terms of processing power. I've got a machine somewhere here that is a P4 1.3ghz with 1gb ram and it runs Win7 and Office 2007 totally fine.
Where you WILL find them slower is the start up process - which you get around by just not closing your apps/shutting down the OS. Use sleep. Long as you got 2gb+ of RAM, it would be fine.
Something like this seems to be the competition:
http://www1.ap.dell.com/nz/en/home/notebooks/inspiron-11z/pd.aspx?refid=inspiron-11z&s=dhs&cs=nzdhs1
But in saying that I haven't kept up with the AMD Neo stuff so can't speak to it.
Otherwise, find a 13" laptop - still plenty portable.