I don't consider this comparable to a netbook if I can't install the applications I want, only the ones Apple approves. Besides, $499 is WAY too much to pay for a netbook. That much will get me a 2.2GHz laptop with tons more screen, storage, and RAM:
http://www.newegg.com/Product/Prod [...] 6834220693
your Netbook is a 6 lbs. laptop. The iPad is only 4x lighter. The two products has totally different value propositions.
IMHO iPad is going to be a killer, but it's not for geeks. Apple products are not about the hardware but the user experience. Nowadays geeks represent only a small fraction of the market and there're a lot of people out there who has no clue about computers and they don't want to or can't invest a lot of time to learn how to operate an maintain a computer.
I have been thinking about buying a computer for my parents for a long time, but I just don't have the time to show them how to work and fix their issues. I think the iPad is going to be just fine for them because it has everything they ever need, internet, photo storage and browsing, email etc.
It is very similar to the Nintendo Wii in terms of product positioning because it's also focusing on an untapped market.
Apple is criticised because of its high prices. It doesn't enter markets where there is a huge competition (blue ocean strategy).
At the end of the day customer perception = reality. If customers like it it's gonna be popular.