Muller
From what I hear 29er's rock. 2 of my current roommates have fully rigid singlespeed 29ers. They both love them and I have to say they are pretty cool. One has the kona Unit 2-9er and the other the redline monocog 29er. The 29 inch wheel rolls over stuff with ease and acts like a form of suspension. They also out handle the 26 inch wheel. I really think the 29 inch wheel is the way to go especially if you are looking at a rigid or singlespeed bike.
A couple things to consider about 29er's ( from my limited knowledge)
- They are a relatively new technology so there are only a few suspension forks currently made that fit the new 29 inch wheel. There are also limited tire options. You can run cross tires if you want to run something small, if not there are not a whole lot of choices.
- Most current bike companies are just starting to realease their 29er.
I'm pretty sure that kona, redline and gary fisher are the big names really going after the 29er.
- In modifying a 26 inch bike, here are the issues that I would see in it.
Your going to need a new front fork - the lower stantion has to be longer to accomidate that bigger wheel and tire combo.
You may want to change the gearing to accomidate the bigger rotation.
In modifying the frame to accomidate the 29 inch wheel your going to dramatically change the gemoetry of the bike. That bigger front wheel is going to dramatically raise the front end and slant the head tube angle back a ton and this will dramatically change the entire gemoetry of the bike. It's amazing what a couple degrees will do to the fit of a bike. Current manufactures have had a tough time making certain size frames because of the new geometry. It's tough to maintain a comfortable riding position and accomidate the 29 inch wheel. Basically changing over a 26 inch frame to a 29er will make it tough to get a good riding position.
If It were me I would look at the redline monocog29er. It's steel and it weighs a bit but it's a rocking bike for $500 bucks and it will get you back out their. With the steel it rides really smooth and is really a hell of a deal. If you want to go up to the $1000 dollar price range you've got the Flight monocog that comes with a nicer material tubing and a set of Avid BB5 disc brakes which are adaquite for your first set of disc's. There are also a couple other options at this price range. Beyond that you will be amazed at how much you can spend on a single speed mountain bike frame

. Anyway I say go for it, you'll love it.
Here's a great website to check out regarding 29er's
http://twentynineinches.com/Eric