I don't know to be honest...
There's a few developments of late that have gained mainstream consideration, but are only the domain of serial early adopters. eReaders, netbooks, fifth gen iPods, for example.
No flash support and locked down apps means its not as extensible as an EeePCs / Netbook, but it probably is a better eReader than both.
No eInk screen means its not as good for books as the Sony or Kindle, but its probably a better media player than both.
No camera and increased form factor means its not as good with media as the newest iPods (or indeed iPhone), but its probably a better web browser than either.
Plenty of people out there that want something to read / listen / surf / do lightweight computing on, but don't want or need dedicated kit for each task. Apple know their marketing, and I could see this taking off...
Of course, its still likely to be the same price as buying one of each from other manufacturers, but hey, can't win em all.
Wonder if it does the iPhone GPS app full screen at full res... That could be something.