I think this will be rather successful product. The consumers are becoming more and more interested in touch screens and gadgetry. Iphone, Droid, new touch screen PC's entering the consumer market place, etc.
I see it as a larger itouch. If it lands in the $500 mark, I'd be on that train. A Bluetooth keyboard would make this a sweet device around the house. Recipes, surfing the interweb, etc. I think a tablet from Apple sounds like a sweet idea.