iPad (or it's decendents) will probably replace the Desktop (or Laptop) for people who view "going on the computer" as a bit of an event, using it occasionally for Facebook, email or Wikipedia type tasks or doing a bit of shopping / price checking.
Interacting directly with data by touching it with your fingers is very natural. Not having to deal with the "cruft" of 30 years of operating system traditions such as a directory structure or task management is a huge relief and reduces the cognitive overload for someone new to computing. Some people never get comfortable with computers, stick them in front of an iPad (or other appliance-type computers that get released) and they will likely be fine. They really are the future of mass-market computing.
I'd love one (already have an iPhone and a laptop hooked up to a monitor) mainly for browsing and apps while sat on the sofa or in bed, so probably Wifi only. I don't see them replacing the Desktop (or Laptop) for day to day work or creation-based tasks (photoshop, long writing, development); but I'd probably take it with me if I went to a conference or something rather than take a laptop.
That said I'd be much happier if Apple allowed "side-loading" of applications outside of the App Store, even if it's behind a load of disclaimers and warnings, hopefully competition from Android and other platforms will make that happen.
Totally agree. Its the future.