Serial terminals are typically very expensive -- often two to three times the price of a far more capable PC. There's still a market for them because they're more reliable and compact than a general-purpose machine.
I'd suggest producing a "terminal on a chip" using an FPGA -- a serial port, a VGA output and a PS/2 or USB keyboard input. The resulting circuit board would only be a couple of inches square, so could easily be glued to the back of a cheap LCD monitor. Even adding Ethernet support (for telnet/ssh) shouldn't be much more difficult, since there are existing TCP stacks for FPGAs.
(The reason I wanted this was so I could mount a WRT54G board in a SPARCstation IPX case, as a low-power-consumption Linux workstation...)
The Briel PockeTerm is essentially what I was thinking of here, implemented using a Parallax Propeller chip.