I see this being as geared towards kids.. but those from the preschool to 2nd or 3rd grade range, where parents completely control what gets put on the device. Limited capacity so it isn't everything and its mother (face it; for tweens and selfies, this is the wrong device; for the fanboi, this is the wrong device; but this isn't low brow either), but works great for a few kids albums and various children's apps.
By that, I'm meaning something like PBS, Curious George, Wheels on the Bus, Cat in the Hat, Thomas & Friends, etc.
That crowd that really hasn't been tapped yet for their own portable device, with parents tired of handing their iPhone over to them to keep them entertained and worried about them spider-webbing it or breaking beyond repair. But it is something more compact that parents could control more for their kids (read: ages 3+).
Design looks beautiful. As others said, follow this design for the outside, add a bit more inside, and you have the next phone that I'd stand in line for. $229 a bit much? I'd say so, but not too much. $199 or $189 would be optimal, but an extra $30 could be pushed for it.
Depending on accessories (read: case), I'm considering one of these for my children.
Perhaps because the target audience for this device isn't you.
BL.