Some technologies just don't make sense. At least with our current battery and silicon constraints.
A nice tablet at $500 didn't make sense... until the iPad came out. (Some early speculation had it priced at @$1,000). An expensive smartphone without a keyboard didn't make sense... until the iPhone. A laptop that is .68 inches thick (and gets thinner from there) didn't make sense... until the MacBook Air.
Apple has a track record of pushing limits, and of not releasing products that aren't highly refined. If they come out with an "iWatch," I'd bet it will be something special. And the following iterations will only improve it.
Your point is merely that innovation is something people don't see coming. I don't think it applies here, however.
Everyone wants an "iWatch," so much so that you can use the term and everyone knows exactly what you mean by it. Everyone wanted an iPhone...they were freaking begging for it for years before it came into being.
In this case, though, Intel's made a massive mistake. You can't pair a highly-durable good (bracelet with semi-precious stones, precious metals and exotic materials like "water snakeskin") with something based on personal technology. Very few people will spend $1,000 for the non-functional components of something that they'll replace as often as a cell phone. And almost nobody will do it twice.
Even more notably, the pictures they sent are of bracelets that make distinct statements with regard to color, texture, etc. They won't match just any outfit...which means that either the user must not come to depend on the bracelet (or they'll be disappointed when it clashes with their outfit and so they don't wear it) or buy multiples (which only amplifies the cost/disposability conundrum).
If they had a form factor that allowed for separation of the cosmetic (semi-precious stones, snakeskin, etc.) and functional (electronics) components such that you could swap the electronics module between shells and update it without having to throw away the whole bracelet, then this could work. It would also allow for a platform, however, where you could just wear the electronics module in something like a silicon wrist strap...and thus, that negates the whole point of Intel's idea here by caching the thing as a fashion accessory. As soon as someone puts it in a $10 wristband and notices that it doesn't do all that much that they need, everyone notices the emperor is naked, and they go back to buying bracelets from Cartier or Tiffany's instead.
The key to the iPad and the iPhone was that they were, at their core, supremely functional. That they had lovely form factors was just icing on the cake, and their cache as items of status followed from that...not the other way around.