It's easy to judge the iPad without actually understanding the idea and purpose of the device. My initial thoughts were negative, but when I started to look deeper into why Apple built such a product, it became apparent. The potential of the iPad is huge and most people just don't get it.

Books

E-books are nothing new but the iPad will create huge opportunities for authors to engage with their readers (giving readers insight on why chapters were written with a video at the end of that chapter). Also, I see books becoming social (sharing paragraphs of text you enjoyed with friends, recommending pages to read via Facebook Connect). Yes, Amazon has the online book market, but the Kindle DX ($489) simply does not have the features of the $499 iPad. 

Music

 I can imagine musicians using the iPad for live shows using virtual synths, beat makers, keyboards.

Transportation

Think of using it in your vehicle as a central touchscreen (similar to the Tesla S). You could use it to navigate via GPS, listen to Pandora Radio, etc. Also, to watch streaming videos on long trips with a 3G connection.

Games

The iPad will be huge for gaming. iPhone games are great but almost all would benefit from having a faster processor and larger screen. 

Photos

The device is perfect for sharing/viewing photos with friends and family. The iPhone screen is too small for people like my dad who needs to pull his glasses out usually to view anything smaller than a normal size piece of paper.

Education

It would be ideal to have in any class where you need to draw figures/equations along with typing notes.

Video

Sharing and viewing videos with friends will be great on this device. Although I do wish it had a camera since Skype would be incredible on the screen.

Art

It will give artists a new digital medium.