Not long ago, I developed, built, tested, and maintained portable internet access devices that used a variety of cell phone based cards to provide access points for multiple users. The system included webcam, DHCP, DNS, proxy, and Ap ache web servers. It used a mini-itx motherboard and Gentoo Linux, with most of the major control functions handled by web based PHP code. The system was highly configurable. It allowed custom private networks, names, fixed IP addresses, and traffic shaping. Access to the internet could be controlled with simple codes. Additional work was completed on designing a DVR security camera system using the aforementioned technology.

The company I made the design for can be found here.

I can also make pretty much any other type of linux device you can imagine. It is just a question of time and materials.

FYI, one nice open source project that uses Linux as a platform for a semi embedded device is Myth TV.I use the software myself.