You'd be surprised how small and portable you can get full sized laptops now. here's a couple of 13.3 inches (really compact and light; you'd be surprised) that are quite powerful, and have passable graphics card, both under a grand:
http://www.newegg.com/Product/Product.aspx?Item=N82E16834147925http://www.newegg.com/Product/Product.aspx?Item=N82E16834157044With both of those you've got plenty of RAM, better processors than you'll ever find in netbooks, and the HD3200 graphics I mentioned in my first post.
http://www.tigerdirect.com/applications/SearchTools/item-details.asp?EdpNo=4961973&CatId=2508 That one is a little over a thousand, but an amazing deal. That's one of the fastest processors you can get in a laptop, with good graphics, and another 13.3" model. I'd actually buy this one myself if I were in your shoes because that processor in that size of a laptop could easily sell close to 2 grand in most stores.
If you're dead set on being 12 or smaller, an HP 12.1" tablet might be best. you can customize those on HP's website and find them in most retail computer store. they range anywhere from 700 and up, and pretty much always have a dual core turion processor and HD3200 graphics. Not a powerhouse machine, but passable for basic games.
All of the above have real dual core processors (not that Atom garbage) with DVD drives, etc. Any of them would be a way better choice than a netbook for average use, or any kind of gaming. So you see, if you poke around a little, you can find a good computer in a small package.