Well we don't have all the details yet, so we don't really know.
But SteamOS is a Debian-based OS that Valve is developing to help bring a simple gaming-OS to non-PC gamers with their "Steam Machines". Personally I think it's rather silly, since quite a few games don't run very well on Linux (via Wine) and there aren't a lot of AAA titles that support Linux, but they also have stuff like in-home streaming, so SteamOS would make a nice HTPC and such...
That's the thing though, is that what releases there are for Linux, and the fact that it is VERY VERY OPEN and is already a home for many amazing home brew applications, games, and emulators, stands as proof that Linux is ready and capable of doing more. Through these projects Steam could generate enough corporate interest towards Linux, that companies like Nvidia might take the time to step up their drivers a tad bit, more companies may decide to develop games for it and so forth, which in turn really benefits the home brew community because the land scape in which they like to freely build will be better because of it all, and more capable.
I wish all this was taking place on Haiku or a Next Gen Amiga OS, but Linux will do.
So just what would this be capable of game wise? I'm interested but I have no idea what steam OS does or what this hand held in particular could do.
I'm expecting it to be able to play some newer PC releases with most details on low or medium with some special effects turned off or down. Though that still leaves a pretty descent library of older games that are still fully playable and or portable should this Steam project provoke the right amount of corporate interest.
On that note, I'd expect it can run Half-Life 2, Portal 2, Left for Dead and all that stuff just fine!
Meanwhile this unit would be able to stream games from your higher end gaming rig and allow you to play them on the go...
...but now with what I hope to be superior hand held controllers.
