You're comment about hitting the netbook market with its own product and standing out is exactly what I'm talking about. Imagine how much growth there is in a high-end $600-$700 touch screen "netbook."
If Apple can do a $599-$699 "netbook" (large-iPod tablet) that can do MORE, giving us something EXTRA, would be an incredible event and product. They would do extremely well, and I believe Apple will deliver something like that since offering a mediocre but expensive netbook experience isn't how Apple has made its money.
The EXTRA is touchscreen and a new format of a device, but I don't think that alone would do it. They have to expand the function, which hopefully is writing and data entry for work.
Image a 1.6 Atom or even better maybe even an Atom-like processor with 2 cores... low level nVidia graphics (9100?) or intel 950 level.
That's good enough for some movie watching, low level photoshop or even higher level given enough time...
You could do the stylus writing even with an Atom processor although I don't know if they go that route.....
It would be really great. For my wants (and lots of other people's desires) I would love a stylus for paint, draw, and vector images. There's no reason these processors can't do it. Slower processors have been running PS for a couple decades now.
Searching through the rumors (assuming they filter through some reality) it seems older ones going back to 2003 were more about a full OS tablet. As we come forward from iPhone release the rumors switched to a more slimline iPod Touch format. All the more specific rumors seem to point to fairly capable devices, however a rather recent rumor claimed Apple is releasing a device to compete with netbooks and PSP type gaming devices. If they are more interested in that market and people with that kind of spending, we are looking at the possibility of a fairly limited device aimed at being unique but inexpensive. Bah.
In terms of connectivity ... maybe 1 USB + 30 pin connect. They can sell adaptors to connect a 30-pin to MDP or DVI...
I think the key is running OSX + AppStore Apps.
USB isn't needed if there is a Bluetooth inside, for hooking up to wireless devices like headphones, keyboards, mice. That will save costs of engineering, materials, and so forth, allowing the new device to be thinner and lighter. Ultimately, market enthusiasm will come from the abilities of the OS and computing, as long as there is a way to get info in and out conveniently.
Note the new Air, which eliminated almost all ports. Apple is feeling its way along a gradual trimming and streamlining of lower end products. We'll see what they come out with in a few months, hopefully.
tv, (I know Apple is doing more integration with Apple TV and other Apple Devices) and other product might be another new iPod, could be the hard drive based iPod touch, (since Apple do believe that touch screen is the future of the iPod) 
