It's a brilliant idea, and makes sense in context of Amazon setting up their own Android store. Of course, Amazon's Android store policies are fairly heavy-handed when compared to Google's, but if they launched their own tablet/phone it would make perfect sense. It solves the problem of why Android phone manufacturers don't really need to update their phones firmware: they're not getting a cut of the software revenues like Apple does.

But if Amazon had their own device, running their own store, hopefully not excluding the default store, they would have an incentive to keep it up to date with the latest Android OS. I would also imagine Amazon could do something worthwhile in their Android mods to improve usability, given that their entire business revolves around superior customer service.

An Amazon tablet could be gangbusters, and a way for Amazon to keep their Kindle owners from jumping ship to Apple's platform.