You're both right to point out the length-vs-width chicken-and-egg scenario: the device can't keep "improving" itself by adding width/length forever.
To clarify: to me, the issue is not simply "more is better". Rather, the issue is efficiency of screen real estate for the majority of usage. My sense is that 16:9 is a better ratio choice for a tablet computer based on the probable majority of tasks it will be used for, while minimizing wasted real estate. The advantages of 16:9 for video viewing alone make it hard for me to understand why Apple chose 4:3. Because of e-book-reading? I can't believe that.
If I'm wrong about a widescreen ratio being usage-preferable, then why have all Apple's computer screens gone from standard to widescreen ratios? I realize of course that how one uses an iPad won't be identical to a laptop or desktop, but still, Apple must have had some rationale for that evolution. Isn't media consumption moving toward a widescreen environment, not away from it? Even the little iPhone has a 16:9 screen!