An iWatch would have other capabilities. It isn't about screen real estate and definitely not about content consumption. The Jawbone Up is useful and it has no screen whatsoever. The iWatch would have much more functionality than that. The watch's purpose is for things the iPhone is too large for. It is too large to go on runs with you, too large to go swimming with, too awkward to carry with you at all times. The iWatch is not for texting or watching movies. It is for tracking your movements, for notifications, for instant login. It's purpose is to be a microchip strapped to your body.
I think those depend a lot on the individual, and if it's intentions are to fulfill those needs, then I fail to see the large market size. Personally, I never want or need a Jawbone Up (and I'm an active person). I can take my phone on runs and listen to music comfortably, whereas with a watch you'd need BT headphones. I would never take an electronic device swimming, and I don't think any of Apple's devices will be waterproof. I do carry my phone with me at all times, and don't find it at all awkward. In so far as the RFID functionality -- that's rife for abuse. Thief's already skim RFIDs for cards as-is.