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I have a feeling that we miss (and mix) things here.
There is really no point to argue on whether Steve Jobs is right about the tab screen size or not. What he stated is just pure marketing aimed against tablets like Samung's Galaxy Tab and others coming to the market. He just said "do not go and buy those since iPad is better".
The discussion whethet 10" is better than 7" or the other way around is like discussion on opinions thus it is completely useless. Some of us prefer bigger devices, some would rather go with smaller ones... It is a free market and today everyone can find something that suitrs ones needs and expectations.
Unless they will develop glasses with a HUD like display that will be affordable, every solutions the current market comes up with will be either too big or too small since we always have to give up something for something in every case.
Just my 2 cents.
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