That may be so with the first generation. But computing power and storage capacity will grow exponentially with future generations. The screen size is almost perfect just the way it is (to preserve portability) but I'm sure larger screen sizes will be offered in the future for those who want them.
I do think that the keyboard-in-the-pants idea has potential. Again, it will develop over time. You will always have the ability to plug a standard keyboard into an iPad should you desire that.
No, they’ll never have the computing power, or storage capacity to compete with desktops or laptops. Because everytime technology advances that will help the Pads catchup it will also help the full sized machines stay ahead. That’s always the problem small form factors have in competing with large form factors, there’s all kinds of neat stuff out there (like Seagate’s 3TB HDD) that won’t fit in the smalls, and everything cool that will fit in the smalls will also fit in the bigs. If somebody invents 3TB flash storage you can use in a Pad you could probably put 300 of them on a PCI card and have PETABYTE flash storage for a desktop. Small form factor items will never have more than about 30% of the power and storage of large form factor items.
The screensize is fine for portability, but for usage it’s crap. If you’re going to spend 40 hours a week doing real work with a computer, which often times involves multiple application and multiple items within the same application, you can’t do that on a screen the size of a trade paperback. At work people hook up two and three 17 inch monitors. At home I’ve got a 27 inch monitor. Sure they’re not portable, but real work generally isn’t.
The keyboard in the pants is pure silliness. It won’t develop over time because there’s no reason for it, those things just exist as an alpha nerd fashion accessory. And carrying around a real keyboard to plug into the pads defeats the portability. If you’re going to carry around a tiny screen and a full sized keyboard you might as well split the difference with a laptop, the keyboard is smaller but still a good size, and the screen is bigger, and you get more RAM and and processor and drive space.
Pads are neat, but it’s important to understand what they are. They’re e-readers with web browsers. That’s basically it. Don’t take my work for it, even Jobs basically says that.