The Pandora is a mixture between a PC and a gaming console. That's why it has gaming controls (Buttons, DPad and analogue nubs).
It is fast enough to emulate many other systems, run a full desktop, access the internet via FireFox and play games such as Quake3.
However, it is not as big as a netbook. Believe it or not, it will fit in your pocket. It's a bit bigger than the Nintendo DS.
The screen is an impressive 800*480 resolution LCD and the battery life is a sensational 10+ hours.
But the most interesting part is probably that it isn't designed by a large company, it was designed by the suggestions and requests of hundreds of people on the gp32x forums. Over several months those suggestions were fine tuned in to what you see today, a completely new open source handheld.
And yes, the Pandora is running an OpenSource OS: it's basically Ångström-Linux with some Pandora-specific changes. The source code is here: (git.openpandora.org).