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Angst - Smaller screen forces a lack of functionality. Simple example would be a database program like Bento. The iPhone version's interface limits it compared to the iPad version. I myself do not have an iPad but I'd like one.
There are some newer tablets coming out that will have that sort of price difference but it is not yet clear they will have the "same" functionality. That will certainly depend partly on whatever replaces Apple's App store, which has excellent selection and reasonable prices for most things.
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