Why? The thing that makes the iPod touch so wonderful is its portability. I've been able to get email, address books, Twitter, and other functions on laptops for years, but you can't slip a laptop into your back pocket or whip it out to play a quick game of Bejeweled while you're standing in line at the Post Office. The iPad(see video below) brings a few new optional features, such as iWork, keyboard attachments, and 3G connectivity, but you might as well get a laptop if that's what you need. As for the e-reader features, I am holding off judgment until I try the iPad for reading books and periodicals.
I'm not the only one to make the iPod vs. iPad comparisons -- I noticed the comments right away on Twitter and other places during the demo, and wrote about it for The Standard (see Early iPad reaction: "It's just a giant iPod touch"). I'm curious to try out the iPad for myself once it hits the market in late March, but I think I'll be sticking with my iPod touch.
Update: I bought a 4th-generation iPod touch and received a new iPad for Christmas. The iPad is definitely superior to the iPad for certain functions (such as reading text and using touch-screen functionality for games like Angry Birds) and has been extremely popular, with many tens of millions sold already. But the portability of the iPod touch, along with the camera/video function, makes the iPod a far more practical device. I use it constantly throughout the day, and never have to debate whether to bring it along with me.
Perfect example: Before taking a two-week international trip, I debated whether to bring the iPad, iPod, or a MacBook Pro laptop. The iPad is better for reading books and quality print content and viewing video, but for shooting video and quick snapshots, reading email on the fly, and twitter, the iPod won out. I was also less worried about the iPod getting stolen, as it always fit in my pocket, whereas my friends who brought iPads had to leave them in hotel rooms and luggage from time to time.
Video: 60 Seconds with the iPad
Sources and research: Industry Standard, Engadget, ZDNet, YouTube. The iPod touch photo is from my own Flickr collection licensed under Creative Commons Attribution license. If you want to use it, please credit Ian Lamont and link to ilamont.com .