The seven-inch tablets are tweeners: too big to compete with a smartphone, and too small to compete with an iPad.
The reason that Apple is able to create products like iPad is because we always try to be at the intersection of technology and liberal arts, to be able to get the best of both.
There's nothing that makes my day more than getting an e-mail from some random person in the universe who just bought an iPad over in the UK and tells me the story about how it's the coolest product they've ever brought home in their lives. That's what keeps me going.