The iPad is an appliance, and it will be successful. But before we get to that, we need to start at the beginning.
When I was a kid I ran a dial-up BBS service (The Outhouse) on a computer cobbled together from old donated computers and a few new parts I'd purchased. I would take apart old computers (donated by my friends parents after their companies discarded them) and test the various parts for something I could scavenge. I spent hours pouring over the massive Computer Shopper magazine to find the best deal on a new hard drive or modem. This was the very definition of an (economy) do-it-yourself general purpose computer.
In my first two decades of computing I never purchased a pre-built computer. I always assembled new computers from parts, or upgrade my existing computer (often replacing everything but the case and CD-ROM drive). Pricewatch.com was my favorite site for a long time.
But along came a new device that started a big change, TiVo. I bought my first TiVo around the year 2000. It was something I could have built myself, but I realized that the convenience of having a dedicated appliance was worth the cost. I just wanted it to work, and it did. Very well.
In the years since, I've been transitioning away from general purpose computers to appliances. The Linux and Windows desktop/servers I used to run (24/7) have been replaced by a Linux based wireless router (Linksys WRT 54 GL) and a NAS (ReadyNAS NV+). They provide nearly all the services the old general purpose computers provided with a few exceptions, and each of those exceptions have been moved to the cloud. I've moved my website hosting and email hosting to the cloud using GoDaddy (< $5 month for web hosting) and Google Apps (Free). They provide a better quality of service, at a minimal cost. Along the way I migrated from writing and hosting my own email server (Java Email Server), to hosting email at GoDaddy, to free hosting at Google. That is quite a shift in effort and cost.
The same progression is true with my other devices. I now exclusively use laptops, and have not assembled a desktop more than 4 years. I've also embraced Apple devices, which have more of an appliance feel than do other devices. I use iTunes to manage my music, a couple of iTunes Airport Express units to listen to music on my stereos, and an iPhone as my mobile music device, and phone. While one could argue that these are not really a change to appliances, I think they match the general trend. Appliances provide a pre-defined (somewhat inflexible) experience that 'just works' as long as you stay in the provided feature set. This is exactly what Apple excels at doing.
Finally, I've adopted a Kindle. While I could read on a laptop, or an iPhone, this single purpose device excels at linear reading (ie Books). I use it every day.
There are several reasons for this trend. One is simple economics. As the years go buy, I have more discretionary income, and more demands on my time (namely two young children). The convenience of buying appliances versus tinkering has certainly changed for me.
I think there is more to the story though. As the computing and home electronic fields mature, it becomes easier and more cost effective to create appliances that fit into our worlds. Which brings us to the iPad.
The iPad is not the first device to attempt to move the general purpose computing environment to an appliance. One could argue that it is really a descendant of the WebTV concept. Take the primary activities people use general purpose computers for and put them into an appliance. This brings up a brief and interesting digression...
Apple does not create markets. Apple waits until a market is ready, and then delivers a product with impressive polish and ease of use. MacBooks don't do anything a similarly priced PC can't do, they are just prettier and easier to use (or have been traditionally). The iPod was not the first portable MP3 player, it was just better (including the iTunes ecosystem). The iPhone didn't break new ground on smart phone functionality, it was just better (again, including the iTunes and AppStore ecosystem). Finally, the iPad isn't new either. Microsoft has had a TabletPC version of their Operating System since 2001. The previously mentioned WebTV provided email and web browsing as an appliance experience.
Apple is attempting to build on these ideas, with Apple's traditional polish, iTunes ecosystem, and of course, Reality Distortion Field. I don't know that version 1 of the iPad will be a success, but I am convinced that appliance computing will become a significant mainstream success.
Final Note to Developers: As Software Developers, we will always use a general purpose computer. Just as a carpenter utilizes a set of tools to build a house, we will utilize a set of tools (ie general purpose computers) to build appliances. Our goal should always be building applications in the appliance mindset. My youngest child (2 years old) can turn on my iPhone and open her favorite puzzle game. All of our computing experience should be this easy.