As nVidia are touting an an ARM11 based offering - the APX 2500 - as their alternative to SIlverthorne, it doesn't seem overly likely that they're going to be throwing money at Montalvo anytime soon.

Yes, but having an x86 compatible chip would be a nice option as it would allow real Windows/Linux (or even Slowaris!!!) to be run, which means all those nice client/apps that are already available to run on existing notebooks can be run on smaller handhelds or sub-notebooks without the expense and hassle of a recompile/rewrite. Now, all those lovely sub-notebook devices have funky displays, often of the touchscreen type, which means clever graphics capability can be a great differentiator, hence a team-up with nVidia could make sense. Also, given the ATi-AMD team-up, nVidia would be smart to keep all avenues open, even eye-wateringly expensive ones like Montvalo!