I think the 10" iPhone or iTablet or whatever you want to call it makes perfect sense.
And, I would buy one.
A 10" Mac using a variant of the iPhone OS (iPhone 2.0, for example) would be golden for me. All the tricks the iPhone can do, but in a larger screen? Hells yeah.
And, while I can see it having e-book software (including Amazon's Kindle app), it doesn't make sense -- to me -- for Apple to release an e-book reader. Sell books on the iTunes store? Sure. Read books through iTunes? Sure. A dedicated device? I really don't see it happening.
Now, if Apple partnered with Amazon to enable you to buy Kindle books via iTunes . . .
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