I think this debate is being played out internally at Apple; hence the next round of updates is NOT going to include the MBA (Apple doesn't want anything to cannibalize the Book of Jobs).
For all of you just using the MBA to surf the web for only non-flash based sites: SHAME ON YOU!!!!
The MBA does a hell of a lot more and not using it properly is like having a beautiful wife that you never get to see--its a tragedy
I use my MBA for its full CS3 suite (yeah, remember those days when Apple used to allow Adobe products to work on their systems?), Word, Excel, and Powerpoint (which is awesome on the MBA for presentations). I use video conferencing on it, download songs/movies, stream Hulu with my friends (which brings me to a major complaint about the MBA--the speaker sucks!), and take notes in lectures (being able to write on pdfs is a wonderful thing).
Would I give up my MBA for the iPad, even a 3G one? Hell no!!!
If you need internet just BT-DUN through the iPhone. The MBA has allowed me to be so much more productive that I used to (even with a 12 inch Apple). I travel constantly and now I can bring my air EVERYWHERE. For short trips I'm now down to 1 messenger bag and that is purely amazing.
I'm curious to hear other MBA owners who use theirs similar to me: what has the iPad contributed that the Air didn't. I am rarely at home, but when I am I use the iMac for everything (BT mice/keyboards are great from bed FYI). What function will the iPad serve?
Do you honestly believe Apple wouldn't prefer selling a $1799 MBA rather than a $699 iPad? I think that logic is completely backwards. Apple makes half its revenue from the Macs, and it's not going to drop them to sell iPads at less than half the price.
I don't know that not introducing the MBA now is a bad thing. I don't want this decision on graphics to be taken lightly. If we don't get it now, it would certainly come at WWDC in June/July.
There is speculation that even the 13" MBP isn't going to be released yet. It might be that Apple is still working around the Nvidia GPU/Intel Arrandale problem. Apple used the Nvidia chipset/GPU in every Mac except the Mac Pro. That means the low-end MBPs are going to probably get the same graphics as the MBA, MB, Mm, and even low-end iMac.
I definitely believe that Apple is in deep with the MBP and Mac Pro buyers who have literally ancient technology (in the digital age 10+ and 14+ month old computers are ancient). Apple can get away with selling an old MBA, because most of the users just don't care what's in it. Us fans in this MBA forum are not the average MBA buyer... we care about the value proposition of the MBA based on the components and price vs. the same MBA ten plus months ago - it's abnormal because Apple pushed the coolness and form factor not the internals.
We can still get an MBA this week, when the MBPs are updated, or by WWDC. Don't give up hope or blame it on the iPad. The MBA and iPad are two completely different markets.