@bullseyed - Your analysis is both wrong and incomplete
The iPad is aimed at use at home on the couch, or when traveling. Not when walking about the street. These are occasions when you don't need the ultimate in portability, but the larger screen size makes many things easier or more comfortable. Most people in their mid 40s or beyond can't focus on the small screen of a phone without reading glasses. Younger people find it uncomfortable holding a phone close for extended periods etc.
A 10" screen gives you a near full sized virtual keyboard. Not as good as a real keyboard for data entry, but more than good enough for casual emails, and Apple's built in email client is fast, clean and easy to use.
Web browsing. The web browser is little short of excellent. It implements web standards well, is fast and fluid to use and is fast to scroll/pan and navigate. The lack of flash is far from the fatal blow that the fandroids would have you believe (flash adds? Who cares! Video? There's an app for most non-HTML5 content. Games? They are mostly available as apps also), and there are multiple apps that let you view flash sites if you really want to.
Movies? WAY better than seat back entertainment systems, much better than video on a phone and enough battery life to cope with all but the longest trips.
eBooks? You're not just limited to iTunes. Any ePub or PDF format book can be read, plus there's a Kindle app that gives you access to the Amazon store.
Content development? Pages, Numbers and Keynote give you the full set of office apps. More than enough for most users. Add to that Photoshop, Garage Band and a host of other apps. Not all content creation is done by typing.
They are small enough to still be easily portable (including fitting on your lap when seated on a train or aircraft), run 10+ hours on a charge, cover 90%+ of most users computing needs, switch seamlessly between WiFi and Cellular radio and they're easy enough to use that your gran can manage one. As a complete package they're head and shoulders above the competition.
You'll find other devices that are better at SOME tasks, and for SOME people but it's the overall combination that people like, and is why they shift of the shelves like hot cakes. Every time Apple have launched a phone or pad in recent years people have said the numbers are hyped, that they can't possibly be selling that fast, that the supply has been artificially constrained. Then the financial numbers are released that proves them wrong.