Who want's a neutered laptop, or bloated iPhone? Build something that fits that size but leverages existing technologies in a way nobody else in the market has any hope of copying for at least two to three years.
I want a tablet that's actually a tablet -- think steno pad sized. That gives you a form factor of 6.5x9.5 and 5/8" thick. 1.5lbs/680 grams or less.
Full wireless connectivity, and auto-synching with your desktop or laptop if it knows where it is on the network--worldwide. Uses your laptop/desktop on the network to get heavy duty tasks done, not quite thin client, but more X-grid/remote desktop like.
Put a 9.5 to 10" widescreen touch sensitive display on it, that's bigger than the original Macintoshes had with about a 1/4" bezel and a great size weight for on the go video. Often, but not always streamed from your own home/work machine! Gotta be able to have enough local storage to watch on a plane/train, or kids in the back seat crossing the wastes of Nebraska.
A battery good for 12 hours in a reasonable conservation mode, 100% non-moving storage. Tons of RAM and lots of flash. It's all local cache for more speed on less power draw.
Killer app? - Sound recording capability and built in sound editing/voice parsing for post meeting/class processing. Farm that work out to the laptop/desktop and save battery. Now you can sit in a meeting or lecture, take time stamped notes and drive a auto-transcript generation utility. This gets even better if you make it Keynote syncable. Just import any PPT slides to Keynote and get the full auto synch for later playback/review. Yeah, there are implementation details here but you get the idea. Never again have some asshat be able to wriggle out of a statement made in a meeting or lecture. Never again have to lug something more than a pound an a half to do notes on or handle quick jottings.
Killer app 2?. When sitting on the desk next to the laptop/desktop and docked for recharging have a mode that would work like an intelligent input device/second monitor simultaneously. I can't begin to tell you how slick that would be for prototyping ideas, or marking up homework, etc.
Throw some other cool app stuff in to boot, I'm sure some of you have some more great ideas. Bottom line is this is not a primary machine replacement, and not a repackaged form factor of anything currently in the market today. It is a new set of functionality in a form factor that could be positioned as the ultimate must have lightweight extension of the current machine into a worldwide computing asset. You are essentially taking your office/home machine's capabilities with you in the size of a steno pad. I probably won't do great for FPS dynamic graphics games, but could probably handle most other genre's just fine, and that's OK because that's FPS is not what it would be designed for.
It would probably also drive a little ecosystem of accessories like on-the-go keyboards, optical drives, GPS navigation and other I/O devices [universal semi-self programming home theater remote? interface] to add things some folks want that others don't.
Shoot for the $499-$599 price point. We are't far off from the capability right now, battery life/form factor and some of the remote software design are pretty damn close right now. Apple already has the underlying technological pieces, just not stitched together in one cohesive manner.
Ireland even has a workable mock-up of it