Oh I think it will definitely catch on. I can pretty much see it. The casual market will think "why do I need a laptop? I just want to surf the web, read books and email, and watch a movie in my room every once in a while. But I want to do it on the go and in a slim, easy package."--Bingo. The iPad.
Then the other companies will try to make touch-screen mockup pads, like Sony and Amazon.
Price drop later this year, I'm sure. And then every teenager is going to get an iPad to chat with their friends in their room and to take on trips and to school.
Take an immensely popular product, the iPhone, and make something that bridges the gap between the varied flexibility of the laptop/desktop, and the portability of the iPhone, and you have a marketable product.
I see this becoming the new direction for personal items. Everyone having their own "iPad" to take with them to school and stuff.
If they build enough educational apps, I actually might consider getting one after a price drop, to take notes in class (teachers don't like the clackety-sound of a keyboard in a class if you type notes) and it's very small and portable.
Fucking Apple. I hate them. But this is one product I see that might be useful later for me. Though not for more than $300.