At $329, which is significantly more than the Kindle Fire HD (with worse resolution) and the Nexus 7, and being only slightly cheaper than the iPad 2, and with the same functionality as the 2, who is this product even for? For the life of me, I cannot come up with an answer to that question.
It is for folks who want an iOS device that is smaller and lighter than the iPad but still syncs with their other iOS devices. Also it is for people that want Apple build quality. The price difference, especially is you are including cell service charge for a year, is meaningless for many people.
You can't imagine who this is for, but even you must realize that Apple will sell millions of these before the end of the year. My god, 100 million iPads have been sold in just a few years. This will sell at the same rate, I suspect.