I would say yes it *can* be done but you will need to do your research and really check stuff out first.
Net books are really designed for staying in touch on the go not for running serious applications that require a lot of powerful processing (such as audio/video creation and editing, hardcore gaming etc)
a 1.6 ghz single core processor is like taking a 15 year step back in time in terms of processor performance (again net books are designed for websurfing and staying in touch not heavy duty processing). That's not to say you can't do your audio stuff, but you are going to need to ensure you are running very lean non CPU intensive applications and plugins or you will have problems very quickly
a 80 - 160GB hard drive is adequate for small home recording projects but tracks rack up the MB pretty quickly and for optimal disc performance you want to try and keep the hard drive less than 50% full. Again it can be done but you may find you are having to do frequent data dumpps to external drives and since netbooks generally only have a couple of USB ports and no Firewire or Cardbus this could be slow going. Again not impossible but maybe laborious. Also the fact that there is no optical drive (CD /DVD burner) in all the netbooks I have looked at would be a pain for me.
Combination of USB only, (relatively) Clunky CPU performance, slower hard drive performance, RAM limited to a GIG (generally speaking) and generally poorly executed BIOS in these types of machine will be more prone to Pops, clicks, freeze ups and latency issues and simultaneous track recording will be limited especially if you are looking at using bit/sample rates of over 16/44.1 than you would expect to see on second hand 5-7 year old desktop.
Again it can be done but it may be a little unstable and frustrating. If you look at the minimum requirements for much of the audio software and audio plugins/VSTi, Usb audio interfaces etc, they usually want a pentium 4 running at 3 ghz or better at minimum. you will be running with about half that power, a small L1 L2 cache very slow Front side bus and comparitively slow RAM. (Again not bashing netbooks, they are superb for the purpose they are designed and marketed for but they are not powerhouse workhorses)
IF you are going to go this route pick and choose your software, Plugins, VSTi and outboard gear very carefully to ensure that everything is as lean and resource light as possible or you *MAY* be disappointed.
If it were my dilema I'd look at a second hand/reconditioned desktop over a netbook