I recently picked up an iPad 2, and i must say it is a fairly awesome device. I think something that is significantly underrated is the responsiveness and overall stability of the OS, everything is snappy- so much more than my iPhone 4 which struggles to keep up at times.
However, i would have to agree, the cameras are a load of trash. For a device that is being advertised quite heavily as one with video calling capabilities, I would have thought that the quality may have been better- i am a bit disappointed with this. I know being so big and all its primary use has nothing to do with cameras, but if you are going to add in cameras, why not do a more capable job of doing so? The quality is quite atrocious im sorry to say.
I'm sure if Apple had decided to make the iPad2 thicker say the same as the iPhone 4 (another half mm), they could have put in 3 megapixel or higher cameras.
But I don't think Apple expects people to use the iPad for still photography. I certainly don't. The camera's were for Facetime use primarily, where these cameras do the job well.
Additionally, I'm sure the $499 price tag was a big issue. Lots of money was probably spent conducting studies to find the perfect price point for this sort of product and $499 was it. Adding higher res cameras probably would have pushed the 16GB Wi-Fi model past this price point and cost Apple sales.
In the end, I think Apple made the smart decision. Give people the cameras they asked for, make the iPad thinner and lighter and keep it at the same price point as the original. Lets see if the new Samsung tablets coming out (claiming to be thinner) have high res cameras and a price point starting at $499.