Played with a family members new 7" Galaxy tab this weekend, and as a fellow iPad owner, I have to admit that 7" is a nice size. Big enough to be very comfortable for most tablet activities, but more manageable in your hands. If there was a choice between 7" or 10" iPads, I bet a lot of people would go for 7".
I agree -- I bought a 7" Galaxy Tab for cheap on Woot, and I immediately preferred the size. Now I pretty much use it only for reading books with the Kindle app. It actually fits some of my coat pockets, but it's too heavy to haul around all day just as a dedicated book reader (it seems to weigh as much as the iPad 2). In the end, it sits on my desk mostly unused, and I use the iPad 2. Still, it has convinced me that a very good 7" tablet could do well.
If I'm Amazon I'd be afraid that, in January, Apple introduces an iPad 3 and drops the iPad 2 to the Fire's price.
A year ago, I thought that 7" would be good, then I got an iPad and got insight.
On an upright iPad I can just read/browse A4 documents, most web sites and 80 chars wide code.
I've asked others that liked 7". For reading literature, 7" is be equally good. Maybe for video, too. (Really young (/near sighted) people can probably read documents, too...)
