Input.
There will most likely be a $799 model, an $899 model, and a $999 model. The difference will be storage space and/or possible OLED vs LED.
You get the best price on displays by buying in bulk. Different SKUs for storage capacity makes sense. A distinction for display technology, doesn't. If they go OLED I think they'll go across all SKUs. If they don't, they'll save it for later iterations.
Why on earth would anyone buy an old tech composite Macbook, when a lighter smaller tablet with touch capabilities, subsidized 3G connectivity, better battery life, better display, ebook capable, accelerometer, facial recognition, etc. etc. could be had for the same money?
Lighter and smaller? OK.
Better battery life? Depends.
eBook capable? So are all the laptops, the iPhone, and the iPod touch.
Facial recognition... where are you getting that from? I've read rumors that say this thing doesn't even have a camera.
Subsidized 3G? Frankly I don't think so and I hope not. It's one thing to get a mobile phone tied to a network provider. I don't want that trend expanding and I think most people don't want additional contracts and AT&T probably doesn't want more mobile bandwidth-hungry devices killing its network capacity. Wifi plus a portable broadband router is the way to go. Let me pay full price and use it where, when, and how I want.
I can see why Apple went that route for the iPhone-- it was, after all, an entirely new venture for them and one closely tied to the support and cooperation of network operators.
This new device doesn't have to be.
As for why the old MacBook... maybe they like keyboards.
Apple really only has a couple options with the rumored form factor:
1) Convince people an on-screen keyboard is workable for longer-form input. I think this is a tough sell, especially for a device even larger than an iphone. I simply don't see people trying to one-hand an onscreen keyboard on a device between 7" and 10" diagonal.
2) Pen input. Everybody keeps saying Jobs doesn't like styli, but Apple did make the Newton and has done a lot with multitouch. It seems to me that Apple might have had greatly improved handwriting recognition bubbling on the back burner since before the iPhone rumors.
3) Voice input. I think this is less likely. It's more complicated and less reliable than handwriting recognition, and requires people to speak in an unnatural manner which is more noticeable (especially in meetings) than modified handwriting (like Palm's graffiti alphabet).
4) No input. The device may be essentially read-only, with pen/touch/onscreen keyboard options available for when text input is absolutely necessary, but not intended for extensive use.
#2 and #4 seem most likely to me.
Myself, I want a device with pen input. For me, this form factor fits best as a replacement for the daybooks people use for note-taking in meetings. Laptops are too conspicuous, the keyboards too noisy, and the upturned screen forms a barrier between people seated at a conference table. A tablet you can scribble text and diagrams on, and store for OCR later, with integrated calendaring and all the features of the iphone, as well as wifi and Safari with multitouch... that's worth $600-$1000 to me. I'd buy two.