RESmonkey, it's really all about context here.
As others have pointed out, your decision will be powerfully affected by factors eg the 802.11 networks at the university, the availability and quality of public computing facilities, the local mores regarding notebooks in the classroom, and -- perhaps most important -- the social environment. Some students spend a great deal of time in the campus centre, libraries, and local cafes (this is certainly true of classic university towns, eg Boston) -- though if you'll indulge my lazy stereotypes for a moment, I'd guess that most of the latte-swilling glowing-MacBook users are reading Arts / Social Sciences subjects, not future engineers. Another important social factor: will you be able to endure your roommates?
If you're going to be doing a lot of graphical work (and I know nothing of what your engineering course would require), a big qualite monitor might prove an immense boost to your productivity. And even a 17-inch notebook screen can't compare to a 24-inch desktop display (these days you can buy a decent Dell PVA-panel 2408WFP for about $550 on sale).
From my own experience, having spent far too many years as an undergraduate and now working for a university's computing services, I'd say most students with a circa $2000 budget would be best served by a good desktop computer (that could double as an entertainment centre) and a $300 to $500 notebook (whether 'netbook' or budget Dell). This is presuming that 'work' on a typical student's notebook is limited to web-surfing, email, and some word-processing.
On the other hand, most of my peers (bourgeois, elite uni overachievers) are wedded to their Apple notebooks. There's a photo I found linked on, I believe, an Ars Technica forum that shows a Princeton lecture hall blazing with luminous Apple logos. Even if university is supposed to be a time and place to 'find yourself', peer pressure can be no less powerful there than in secondary school. Do you really want to stay shut up in your rooms, labouring away at your desktop machine? Oh, wait, you're an engineer...