The usability of interpersonal interactions can't be underestimated. Also, if small web sites can offload repetitive work with tools such as autoresponders they can work on the higher value operations such as back end programming and tending to their databases. Creating simple forms, online questionnaires, tutorials, FAQs and so forth can go a long, long way. The bottom line is that small web sites have the opportunity to beat larger companies with highly personal products and services. Those bland emails we all get from larger organizations just aren't the same as the ones from real individuals.
People can tell if the person at the other end actually cares.
Small businesses on the web, like the real world, can compete based on how much they care for their users, patrons, or clients. My Linux Installation I installed Linux on an old box about a week ago. It took me about 1.5 hours. Here is a blow by blow account of my installation. Boot up and hit enter.