Much of the speculation around an "iPad" -- a rumored 10" Apple tablet -- has portrayed it as an Amazon Kindle-killer or a large-screen iPod touch, but there's a strong case that such a product could effectively serve as a replacement for – or a compelling complement to -- Apple's non-platform sleeper Apple TV.
Apple faces a dilemma in moving iPhone apps to a larger screen size or higher resolution. It must either scale them (ugly), ask developers to create a large-screen version (cumbersome), or run them in a window (which would beg some level of multitasking at least beyond what the iPhone OS does today). Not only that, but a 10" device is simply inconvenient for some of the iPhone's apps. Just try focusing on the road with a 10" navigation screen suctioned to your windshield.
The base version of Apple TV is 40 GB, just a bit over the 32 GB that has been offered on the iPod touch and iPhone. By the end of the year, a 64 GB flash product could be well within reach for a flash–based iPad. That would easily store many consumers' photo libraries and a Netflix queue's worth of movies. Rumors about the "Cocktail" music experience notwithstanding, the tablet would make an excellent platform for watching and displaying video and photos. a 10" screen would be a fine fit for 720p video and the small size would mask artifacts that could show up on the 50" television. But the iPad would be even more versatile than Apple TV.