I don't get why screen size is such an issue, I mean why doesn't apple make multiples iPhones or iPads, they make multiple cinema displays, multiple iPods, multiple macbooks, multiple iMacs etc. Why doesn't apple give us a smaller 5 or 7 inch iPad I certainly would buy one or a 4-5 inch iPhone. Why is Apple so against the idea of a UMPC/PDA/MID device it seams like there a clear consumer demand for something like this, from there own user base in fact. I wouldn't mind a thicker iPad because a little bit of extra heft and weight goes a long way for making a device feel premium and substant in you hands. When I held a gtab 10.1, an iPad 2, Samsung Series 9, and a Macbook air the devices felt really flimsy and fragile and I was afraid of ripping of the lid of the macbook air, not to say these devices were poorly built but the lack of weight cause one to perceive lack of quality. The only feature I care about seeing in iPhone 5 or iPad 3 is the implementation of digital pen input for drawing and taking notes which would be perfect for a student and amateur artist like me. I know there are capactive styli out there but they kinda suck a lot (ie no pressure sensitivity, no palm rejection, or a fine tip)
Well for one thing with finger driven devices the size of UI elements is extremely important. If they're too small then you could have trouble interacting with them. Too big and it wastes space. Of course Android is available on many different from factors, but then Android was designed from day one to work on different form factors. iOS wasn't. And even then it's not flawless.
Another thing is that Apple likes to streamline its product lines. When you remove color and capacity varations, there are only three or four basic iPods (depending on whether you count the touch). One of which hasn't received a major update in several years. And while there are indeed several varieties of Mac and MacBook, it's still considerably fewer than what some other PC makers put out.
I agree that a [optional] pen would make a great addition. I currently use a capacitive stylus to draw with my iPad, but as you point out it has serious limitations.
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