The original Foleo was canceled because it would have based on a version of Linux, forcing Palm to support another operating system. The upcoming one will apparently use the webOS, the operating system which will be Palm's primary focus going forward.
Netbooks are intended primarily to access the Internet, which is also the main focus of the webOS. It will come with a highly-capable web browser and email software, and will also be able to wirelessly synchronize a wide variety of data with online services like Google, Facebook, and Microsoft Exchange.
Palm Could Be Working on a webOS-Based Netbook