The hypothetical 8-inch iPad really does become an oversized iPod touch, as some early critics of the iPad had asserted.
Forget the Moore's Law strategy for product segmentation, try form factor. We've seen hints of that with iPhones and iPads alternating in roughly 6 month increments (and price comparisons are definitely obscured by the generous margins that phone subsidies provide), but I think that strategy might become much more obvious this autumn.
These are distinct devices: one ultra-portable and pocketable, the other one being a portable mini content consumer. There's a difference, right?