iPad 1 is stuck on iOS 5, which is 17 million units according to this article: http://en.wikipedia.org/wiki/IPad
There are certainly fewer bombshells in iOS6 than iOS 5, but it's no stretch to say that adopting iOS 5 early on was worth 100s of hours -- it had huge improvements for dev.
Also keep in mind that the fewer OS versions you target the less testing you have to do.
I mean, it's good entertainment on a plane, but otherwise it's just a handy thing to lend to non-technical people who are uncomfortable with keyboards. If I'm not in front of my computer, my phone is more useful for getting to the web.
... but basically what you said backs up the target audience argument.
Outside the house maybe.
In the bedroom/sofa/crapper the iPad cannot be beat by the phone or the laptop, though.
What it does is, it frees you from having to be tied to a chair and office in your own house, for browsing, checking your mail and reading stuff.