Beth's had an iPod touch for a while now, and when the 4th generation (with cameras! and high-res screen!) came out, we both got those. Given my usage habits, I was also tempted by the larger screen of an iPad.
So, after a chance to see my cousin's iPad up close at Thanksgiving, I bought one the day after thanksgiving. The timing turned out to be fortuitous: Both the devices and cases had significant discounts. I wound up getting the cheapest iPad (wifi-only, 16 GB storage), and an Incase case.
It's serving it's intended role as a bigger iPod touch fairly well: As I now have 2 such devices, the children don't fight over them (much). They each get one, at least on those occasions (movies during car trips, etc.) where that makes sense. It's also quite handy as a portable web browser, with the excuse being that I'd use it for that with students.
It turns out that there are a number of differences between the iPod and iPad, some of them kind of bizarre. Some of the apps that are preinstalled on the iPod are absent on the iPad: The weather, stock and calculator apps are missing. The "Music" app is renamed to "iPod", as well. Within some of the apps, the UI has been reworked for the larger screen, which is usually welcome. In general the larger screen just feels bigger: It'll run iPod apps in a smaller rectangle, with the option of running them either at original size, or magnified 2x. Some apps are coded to take proper advantage of the larger screen.
From a usage perspective, some of the change is a simple, if nonobvious, consequence of the device just being bigger and heavier. Things like touching the intended spot on the display is easier, as the spot is bigger. Accelerometer-based games are slightly harder, because it takes more to move a bigger device. The bit which surprised me most is that I use the rotation lock (don't let the screen auto-rotate) a fair amount on the iPad, but almost never on the iPod touch. It's enough heavier that I set it down, and that's a more likely to rotate in a way that I don't want.
The larger battery is a mixed blessing: A full charge lasts noticeably longer than on the iPod, but it's enough hungrier that I more or less need to use the wall-charger that came with it, instead of charging through the computer's USB port. The bigger speaker is nice: The iPad sounds better than the iPod, though it's still clearly limited by size. (I should really get my external speakers set up with it.)
Overall I'm pretty happy with it. Like many pieces of modern electronics, it's mostly a matter of what you'd use it for. Beth wouldn't use one, but mine gets a fair amount of use.