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I am inclined to agree with jimlynch that it is a project for the living room. If they can combine the attributes of a tablet, smartphone, smart appliance controller and HDTV in a single device that brings computing power, entertainment and connectivity into a single device in the center of the home, it would be fantastic. One of Apple's real talents is developing interfaces that are smooth and intuitive. How cool would it be to have one product that you could easily use to control all of the functions of your home, provides visual and audio entertainment (video, music and gaming), is capable of high quality video conferencing and voice calls, and lets you control it all while shifting easily and seamlessly from task to task? Very cool, IMHO.
Or maybe it is a 4" screen on an iPhone. :-)