I was lucky enough to receive a Nexus 7 for Christmas. I've previously written that I didn't see a market for 7" tablets. That's obviously been proven incorrect (I agreed with Steve Jobs and even Apple has gone back on his comments with the Mini).
Having had mine for several weeks I can say that, while the form factor is great for certain things (it's very portable, easy to read books on and is perfect for single apps) it definitely isn't perfect for surfing the web or writing content (I wrote some of this on my iPad using a Bluetooth keyboard). They basically work like a bigger-screen version of your phone (for checking email and the web) or an iPod Touch (for media consumption). (Which might explain the growth of phablets.)
To be fair, even my iPad is a bit small for churning my way through the hundreds of articles in the RSS feeds I subscribe to. What I want is a bigger tablet. A4 in size (or slightly bigger to allow for some chrome), which works out at 14" across the diagonal.
That size screen is going to costly, but the device doesn't have to be powerful, it would be so big I'm not sure it would work for gaming anyway. Neither does it need to have a lot of storage (media playback could work but to keep costs down you'd need to ditch anything you could), just a big screen. It doesn't even have to have a particularly high resolution. 1600 pixels on the long edge should be fine.
For long-duration reading weight is going to be important, which is another reason I'd ditch practically everything but the screen and a battery (the size would mean this didn't have to be too thick). So you're limiting the market appeal for typical tablet users, but that's all right, because you'll corner the education market (that size screen not only allows better textbook reading, but potentially split-screen applications, such as text and note-taking).
At the moment we seem to have fallen into two tablet sizes: 7" and 10". By going bigger any manufacturer would be in a category of their own (the only tablet anywhere near that size, The Kno, has been discontinued) and you'll have the likes of the newspapers and textbook publishers eager to work with you. Not to mention the people like me who want to consume something other than ebooks as the sole text-based form of content. There's also the comic book crowd. If the tablet makers don't like it, one of the Kindle's competitors could build it and give themselves an edge over Amazon.
I'm not saying it's going to be an easy sell, but I think there's a market for a big screen. Add a dedicated decoder chip and you've got the ultimate portable media playback device (imagine movies on it), provide a cover with a keyboard (far better size) and you've got something that could be far more productive than a normal tablet too (but depending on price you may bump into the ultrabook market though).
I doubt anybody would do it, but I think the idea's got legs.