I am looking to purchase a netbook and am looking at Samsung and HP but would like to get some recommendations. I would like to spend around $400 but less than $500. I have read that a N450 processor is what is best right now.

Also what issues can I expect on a netbook, wireless, touchpad, display, etc.?

In general, netbooks have the same features as a laptop, just less of them. Less RAM, less disk space, less CPU horsepower, less screen real estate, smaller keyboard, no CD/DVD drive. In general, they are NOT a replacement for a laptop or desktop. Now that said, netbooks are decent productivity tools. They run web browsers, office suites, videos, etc. fairly well. What they are going to fail miserably at is high-performance games.

One thing to investigate is the possibility of upgrading components. Thanks to the asshats at Microsoft, netbooks are limited as to their hardware specs. The RAM limitation is particularly evil. However, if your netbook doesn't have the RAM soldered to the motherboard (which a number of them do) you can always add more RAM on your own. My netboook (a Dell Mini 9) has 2GB of RAM, a 16GB SSD and a 16GB SDHC card I use for my data. That has been a very functional machine, although the 16GB SSD is running a bit low on space.

I'm not up to speed regarding what is considered to be the "must-have" in CPU's so I'll take your word for it.

Most netbooks are more or less Linux compatible top to bottom, but you should make sure you know exactly what hardware is included in the one you're getting. General Linux support for these devices are great, but there are a few sour apples out there: Most notably some netbook models come with wireless chips that are more or less poorly supported on Linux (some Broadcom ones, Ralink RT2860 (support for which has been deteriorating in recent Linux kernel releases)). Video is almost always provided by Intel chips which are pretty well supported in Linux. Touchpads are usually Synaptics or compatible models that are nicely supported (the Linux drivers are generally far superior to the Windows ones). With most modern and up to date Linux distributions it should be pretty much hazzle free to set it all up. Even the webcam works out of the box on my netbook.

But what it really comes down to is what you're comfortable with. I wanted a very small and very light machine, and after prowling through the local computer stores I decided on the Eee PC 901. It's absolutely tiny (a 9" netbook is actually a LOT smaller than a 10" one), has couple of crappy small SSD drives, and the option to upgrade both memory and SSD. I upgraded mine to 2GB RAM (which is mostly unused because of my lightweight config, so that wasn't money well spent) and replaced the slow and buggy main SSD with a RunCore 32GB model. I haven't even used half of it.

You may want to consider a Linux distribution aimed only at netbooks. I have used Eeebuntu and Ubuntu Netbook Remix and find them both far from ideal. They simply carry too much luggage for these small devices and they appear slow and cumbersome. My distribution of choice is Arch Linux, which is a lot faster than the mentioned Ubuntu variants, but you should be able to achieve similar performance with other bare bones distributions.