Like a lot of other people, I'm not very interested in the iPad myself for all of the obvious reasons for an open source person who likes doing random things to his computers (see Tim Bray for a representative example). But I have a theory about what Apple is up to here, and it goes like this:

The iPad is a computer for people who do not like computers, not a computer for people who like computers.

The problem with making computers for people who like computers is that it is more and more a limited market with little potential for real growth. Most people who like computers already have one (or several), and these computers are generally pretty adequate ones. Without major technology improvements to obsolete existing hardware on a regular basis, you are are down to getting your sales from a moderate stream of new people, people replacing worn out machines, and whatever market share you can steal from your competitors (who are all trying to steal your market share in turn).

(In short, selling computers to people who like computers has become a mature market. Mature markets are boring and unspectacular, and companies in mature markets don't grow much.)

Selling computers to people who do not like computers is much easier; either they don't have a computer yet or they don't much like the one that they have. This is a growth market, potentially a very large one, provided that you actually have a computer that these people will like. Which is where the iPad's restrictions come into the picture.

People who do not actively like computers do not care about a lot of the computer stuff; they just want the computer to do things for them. All of the fiddling around that is necessary (even on a Mac) to get the computer to do things and to keep it doing those things is an annoyance to these people, and if you want to sell to them you need to make as much of it vanish as possible. Apple doesn't intrinsically need a closed and controlled box to do this, but it does need something that just works, all the time, and getting that is less effort with a closed box than with an open one (and it's in Apple's inclinations anyways). And Apple is very good about making the magic work.

Netbooks made vague attempts at this market, but they failed to be sufficiently appealing, ie sufficiently different from the same old computer that these people don't like. Apple is not making that mistake; it has targeted this market as the iPad's primary market, so the iPad's limitations are entirely deliberate and consciously thought out. And Apple is doing this in order to tap into another major market and that market's explosive growth potential, just as it did with the iPod and the iPhone.

(I'm not the only person thinking along these lines; see here, here, John Gruber, and here, for a random sampling pulled from Hacker News's front pages. Also, my thinking about this owes a debt to Thom Hogan's writing on dpreview about what camera companies will need to do in order to keep growing despite the DSLR market maturing and flattening.)

Sidebar: on some iPad restrictions

Lack of a physical keyboard probably isn't going to be much of a drawback for the 'don't like computers' market, because I suspect that they don't spend all that much time typing away on a personal computer, or even interacting with it (which will help avoid the well studied fatigue effects of long term touchscreen usage). Similarly, not being able to run multiple applications at once sounds awfully like a feature, not a flaw, since it avoids all sorts of confusions and annoyances and likely mimics how these people already prefer to use computers (especially ones with relatively small screens).

The appeal of a single, well designed and simple place and process to get applications that just work should hopefully be obvious. The applications may be not worth your money, but people waste money all the time; what they won't be is dangerous to the overall experience.

(Think of it like iTunes. What you get may turn out to be bad music, but the experience of doing it is pretty decent and the music will always actually play. This is a lot different from the experience of getting either digital music or software in a more open environment.)