You missed my point. I never said handwriting recognition or a physical keyboard was a better option. If anything, my point was that handwriting recognition had no business replacing any kind of keyboard, hard or soft. Instead, stylus input is valuable as a free-form entry tool, for note-taking, sketching, or recording mathematical symbols.
I didn't mean to single out the iPad alone, I was more interested in pointing out a shortcoming of the tablet form factor as a whole. Tablets are great for certain roles, but they have no business in any task that requires a large amount of ASCII text entry. If you're going to be writing code or typing a term paper, it's hard to argue against a physical keyboard.
Stylus input, just as keyboard input or touchscreen input, has a place in consumer electronics. However, it needs to be viewed as an augmentation rather than a replacement. In the past, there were attempts to use the stylus to replace the keyboard or mouse, and I think the historic failures of the stylus as an input device have caused the tablet industry to stubbornly refuse to include a valuable and appropriate form of input. Do you not think the iPad would be an even more appealing device if it included a pressure sensitive stylus? Touch could still serve as the primary input, but the stylus would be there for jotting down notes, drawings, or formulae. I think that would be pretty sweet.