Every Apple product has its place - by design!
I have an MBA 13 and iPad 2, and use both extensively, but for quite different things.
For me, there is no substitute for a "real" computer for doing work. I need a proper full-size keyboard, and be able to run desktop OS software (MS Office, XCode, VMWare, VirtualBox etc.). I need 8GB RAM minimum for most of my work.
For some things, I could get away with an iPad (full size) + physical keyboard, but IMO anything more than an e-mail with the on-screen keyboard becomes frustrating (not to mention the fact that the keyboard eats half the screen real-estate).
The iPad excels as a content consumption device - I use it as my principal device for reading, watching video, passive web browsing, and for social network/email consumption (not creation).
I like the idea of both a larger laptop (15-17" screen) and a smaller iPad (Mini), and in an ideal world, I would have them all - just as Apple marketing intends.
iPhone: go everywhere device, always-on connectivity, limited media consumption
iPad Mini: ideal where high-mobility, small size and light weight are desirable (single handed use ) at the cost of screen size.
iPad: All round media consumption when stationary (needs two hands, or a rest). Better viewing experience for print or video media than smaller screens at the cost of increased weight and bulk. Can do limited duty as a productivity machine (with additional keyboard)
MBA 11: The 11-inch is close to an iPad+keyboard, but less flexible (can't remove the keyboard). However, it can run real desktop apps.
MBA 13: An ideal size for a portable laptop - good performance for the form factor, but not ideal for heavy computing needs.
MBP 15: Better screen real-estate, more computing power, at the cost of increased weight & size.
I'm sure there are people who are crossing these artificial boundaries with their devices (novels written on iPhones etc.), but there is clearly a niche for each product. I'm pretty sure that Apple considers the position of each product very carefully, to ensure that no single product could be completely replaced by another one.
I'd personally like to see an iPhone with a 5-inch screen (but this could encroach on iPad Mini territory), and a portable "workstation" PC (similar to 17-inch MBP), but I doubt this has enough market share to make it worth doing.
My 2 cents!
John