I've heard more than a few people say they are confused by the XO's user interface. Biggest hint for working with Sugar: think verbs rather than nouns. (More on this below.) Learning the Sugar GUI is an intellectual challenge-- we are so fascile with the Mac and PC interfaces that we forget there are design decisions behind them. Just as learning a new language helps you understand your native language better, contemplating Sugar will make you think about what's behind the GUIs you are familiar with and human-computer interactions in general.
David Thornburg wrote a thoughtful paper Is There Enough Sugar in Your Educational Technology Diet? (available here: Scribd) that revisits the development of the graphical user interface (see a screen shot of the first from Xerox) and explains how the XO's Sugar evolved based on the question: What interface works best for kids? Seymour Papert advised that a computer for children would be verb (action) oriented rather than noun (object) oriented. Instead of folders and documents (nouns) on which familiar UIs are based, think writing playing, chatting, drawing (verbs) and time (journal: what activities did I do yesterday?)
Other small computer designers are looking at kids as kids rather than proto-adults, and are grappling with appropriate design-- Check out SNS Project Inkwell, which imagines a variety of computing devices designed especially for children. Take a look at PI's functional requirements for student devices (pdf).