If you keep up with the XO development chatter, it is pretty clear that there are lots of details to untangle around power management. Nobody has tried to create a laptop which puts itself to sleep and wakes itself up transparently while you're using it before. This is a big change, and it is going to take a long time to sort out and truly maximize the potential benefits.
However, while using the XO primarily as a book reader, you do see flashes of how effective this approach can be. I was reading in bed, then put my XO down and took a nap before dinner. Five hours later, my XO is still sitting next to the bed, backlight still on, cpu asleep, battery at 93%. So, clearly the potential is there for game-changing power consumption, if they can keep the ball rolling long enough to straighten out the kinks.
Update... 20 minutes later, the battery is empty, so you might want to focus more on the "kinks" part above.