Okay, I'll take a different tack on this. If you were trying to dominate a market segment what would you do? First, you would find it difficult to have one size fits all just because you are designing for the masses and people have such varied likes and dislikes. Your goal on the initial design is to aim at the middle and try and spread the solution as wide as you can. Invariably, you will find that the outlining groups on either side have a diminished solution vs your center target. The key is to figure out whether the groups left out are large enough to go after. Now if you find that the outlining groups are large enough, you provide a product that plugs the gap. This has more to do on not allowing your competition access than adding revenue. The more difficult you make it for your competition, the more they have to spend to get into the market.
Now with a fairly good rollout of the Samsung Tab, I would say there is a large enough group. Now there was a reply indicating that these just might be people that are anti-Apple. I would believe that if the Samsung was aggressively priced. But it is actually equal to or more expensive than the iPad. I'm willing to bet that the size was the pre-dominate decision factor in Tab purchase. Again, I myself like the current size of the iPad but for certain functions I can see where a smaller size would be better. 1) E-book reader and smaller size like a paper back book would be better. ( I don't read books on the iPad, I read books on the iPhone) . 2) Games - I would suggest that the 7inch is the perfect size for interactive games. It's not a coincidence that the Nintendo DS and Sony PSP are that size. This would actually be better gaming platform than the iPod Touch in my opinion.