For web programming it is fine. Reddit was programmed on a 13" MacBook, after all.
If you're doing Xcode development I might still be hesitant. The rapidly upcoming Xcode 4 environment is one large window and seems to put smaller screens at a significant disadvantage. It's probably okay, but I would really want to see it running.
That's why I prefer 15/17" + external 22/24" - I would never be able to handle the small 13" just by itself.
Bigger is always nicer, but the tradeoff is that it would be a lot harder to carry my laptop with me. I prioritize mobility.