After playing with the iPad for the past week, I think that this device does a few things very, very well:
Internet surfing: a huge step up from the iPhone, due mostly to the larger screen and faster processor, almost as good as a full-size computer IMO, but much more interactive and tactile...
e-Reading: amazing, amazing, amazing... I have downloaded newspapers, books and magazines and the iPad shines in that area like no other device I have ever tried. My favorite newspaper gets downloaded directly to the iPad and it's like reading the actual paper without the ink stains. Magazines are even better, the pictures are vivid, crisp and gorgeous (even better than print). And even though I don't read that many e-books, the iPad is a great e-reader.
Media-rich content: Pictures and movies look incredible on the iPad. It takes media-rich apps to the next level.
Games: wow! The iphone was already a pretty cool gaming platform, but it's nothing compared to the iPad. It's a very tactile experience and, with the larger screen and I think better audio, it's like you are in the game.