A cheap web tablet in your future?

It seems for Mike Arrington and the 560+ commenters that there is a desire in the market for a web tablet. Arrington is proposing they build it as a project and bring it to market themselves in a bold bid to build traffic and a product that many seem to seek.
In truth, what they look to build is an inexpensive ($200) iPod touch. My touch lives in my living room. I use it to surf the net, play games and be connected whenever I feel like it. The instant on, quick WiFi and fun operation make it a staple I am not sure I’d be happy living without at this point.
Arrington and his band of rioters want a big screened version. OK, I can see how that would be fun, but building such a beast at $200 is going to be very difficult. Another plus/minus is open source. I don’t want to rain on his parade, but I’ve not been satisfied with open source projects.
What I do think is Apple will be jumping into this market with a student/web tablet.

They’ve the software platform, distribution model and even a store to buy add-ons and content from. It is all slick and done. All they need to do is build the hardware. I see this coming at $599 to $799 range and it doing very, very well. Perhaps September will bring some interesting things from Apple, really one of the only companies I could see doing this right.
How about you?