Maybe its not the thought what will it do. Everyone thought of the iPhone as another phone with plausible iPod integration. No one ever imagined who truly powerful the iPhone ended up being.
This tablet may end up being exactly the same. We may guess what it can bring, and some of our guesses can end up right. While in the end we will get something we never thought of.
Just saying.... iPods, iPhones, MacBook Air..... list ca go on with things we thought were doomed to fail, yet are Apple's strongest.
I see it as an evolution of the iPod Touch. As an iPod the classic and nano are better music players because you can operate them "eyes-free". iPhone is just right as a phone, but Touch is lacking a "hook". I have one an it didn't pass the "need me" test of staying in my crowded pockets. iPhone wins by default of being a phone for those that have it... and Apple has got them USING it more than any other smartphone on the net.
What would it take to get me to USE the Touch and not put it down. Start with what it WON'T have... it won't be a phone or have mobile internet as that would step on iPhone. Along the same thinking, camera and internal microphone will be limited or in some non-phone-friendly fashion... It won't run Atom because netbooks are power hogs compared to iPods or Touches... it won't backpedal on 20 hours of music play or 5 hours of video. It won't run OSX because Apple is moving forward to CUDA accelerated desktop and application interfaces with Snow Leopard. As that takes full 3D chips, Nvidia is the only mobile maker even close.. and Apple is moving to "roll it's own" starting ASAP. That means it will be iPhone OS based (3.0 apps already have to have "resolution independant" layouts.. and tied to the wildly successful App Store that's Apple's new baby.
My Touch nearly edged out my Acer Aspire One for the coveted "sofa surfing" position. The screen size of the Touch was just too small to be comfortable. Even a 9" AAO screen is pushing tired eyes. I agree with another poster that text input of some kind is the killer feature to nail. The other thing I use my AAO that Touch can't do now, is for is on-the-go camera downloads and light editing and printing. The ability to pop in SD cards and start uploading pictures from the park wifi would be the killer feature of Touch over iPhone. That would mean the ability to also make substantial blog posts or light web page editing while eating ice cream (not a coffee drinker). I think the current gen Touch hardware could go to "netbook" sized screens quite easily, the internal chipsets are rated more than high enough for the displays and with the increase in size you get free space for extra battery to compensate for the backlight.
As for pricing, I'd expect it to be about current netbook prices maybe $500 tops if they keep it simple. The $229 touch has Wifi, Bluetooth, etc now, and 9-10" screens are on $300 netbooks. I would see them leaving off the camera to hit the lower price point and keep the "touch" market segment.. after all a $229 touch versus a $299 netbook is already a weak deal so they can't go much higher. Keeping it "iPhone" OS builds the phone brand and doesn't weaken the notebook lines at all.