Yep, main reason why I'm not buying one now. From the various teardowns that have been performed, there's a lot of extra volume in the iPad and quite a bit of room for Apple to shrink the internals even more. Shouldn't be much of a challenge for Apple to ditch most of the bezel and produce a physically smaller iPad while maintaining screen size and battery life.
Plus they should be able to knock down the weight a lot by moving to a composite back as they did with the iPhone. Milled G10 would be preferred, but more likely molded Lexan due to cost. Milled aluminum looks nice, but it's not a very practical choice due to density. Smart industrial design, dumb engineering decision. The convex back needs to go too.
Secondary reason is cost. The iPad doesn't have any competition right now, so Apple's basically able to charge what they want. I figure increased competition should force them to drop their margins down into the 30% range vs the 50% range they're in now.