A further problem with the iPad-as-iPhone approach is that this largely ignores the competition's Tegra 2 CPU/GPU and it also tends to minimize the difficulty in producing a 2048x1536 9.7" LCD that could match the quality of the IPS display used in the current iPad. Making the jump to a 9.7" display at the so-called retina resolution (or near to that) is a lot more difficult than doing the same on the iPhone's 3.5" display (as someone said earlier, it's not simply the case of "gluing" together four or more iPhone screens to make one for the iPad). One of the reasons for this is that the manufacturing yield of LCDs is strongly influenced by the total square area of the display -- simply put, a larger display (by area) is more difficult to produce even if both products are at the same pixel density (pixels-per-inch).
Just try to compare the price on a 35" LCD HDTV to one at 97 inches (if you could find the latter, which I don't think you can) and note that a 97 inch, 1080p HDTV has a much lower pixel density than does the cheaper 35" set (I'm not trying to claim that the manufacturing problems and market dynamics are the same for HDTVs as they are for tablets, but this comparison should give you a hint as to why larger -- in area -- is not necessarily easy).