I don't even like Apple (their misleading advertising really pisses me off). Hell, you should see how I react when people look at my Zune HD and give me that, "Oh, I guess you couldn't afford an iPod Touch." look but I digress. But even I agree the iPad is a killer product.
Several reasons have been mentioned already but you got to admit, timing was crucial. We have reached the age where everybody wants to be online all the time. Back when Microsoft tried to push Windows XP Tablet PCs, people hadn't yet reached this 'I always need to be connected to Facebook/Twitter/a thousand different streaming-video options to keep myself entertained and engaged' state that they have today. A lot of us were OK checking our email twice a day and downloading pr0n on Kazaa on our desktops.
If your need for 24/7 connectivity emanates from a need to always be productive, get an ultraportable. If you need to be entertained all the time, get an iPad. For some people, the iPad can serve both needs well but I tend to think this slice of users is a minority. For everybody else, a decent smartphone or a dumbphone and iPod touch would suffice.
<--- carries a Nokia dumbphone + Zune HD 32GB. No need for productivity on the move, nor a need for more entertainment options.