mortenandersen is wrong. i produce the vast majority of my work on the ipad. i also consume on it. for some people, it can easily handle both consumption and creation. for others, it may not. your mileage may vary, depending on what you are doing with it.
as for this external keyboard complaint, that is kind of like saying a desktop is useless because it requires a monitor or a keyboard. the beauty of the ipad is that you can choose. one moment it may be a fabulous ereader. another one it might be very similar to a laptop. except, it weighs about as much as the macbook air with the keyboard, has about twice as much battery life, and costs a lot less.
as for the op's question about formatting, evernote handles rich text. pages handles rich text. many other programs do as well. a lot of people want to move seamlessly between microsoft word on osx and the ipad, and that is where the trouble starts. but, that is a different issue.
in my case, i produce my work on elements in the ipad (it handles markdown well) and do the final stages with scrivener (osx) on my macbook pro.