What I find fascinating is that the Fire has a 7" screen. As an owner of a Nook Color, my sense is that 7" is the right size for a lot of things, like eBooks, movies, and maybe email, games, and (some) web browsing.
But for me personally, I outgrew the 7" form-factor pretty fast. I'm enjoying the 10" (Asus Transformer) a lot more, and could probably live with an 8" screen. With the Nook, I found that I was resizing websites A LOT.
I wonder if 7" is really a sweet spot for so many people, or if it's more a "well, who can pass up a $199 tablet?" kind of thing?
OK, so here is my prediction: I think we're still in an "exploratory" phase, and it's not yet clear where the optimal tablet design is (yeah, yeah, spare me the "different strokes, different folks" speech!). BUT: if Apple decides to produce an iPad-mini (7" or 8" screen), we'll see the masses flock to that form-factor. Otherwise, I predict that a lot of Fire and Nook Tablet owners will be expressing frustration by early 2012 that their screens are just a tad too small (call it the Goldilocks phenomenon)!
-Matt