I think Google made a mistake in buying into the idea that phones and tablets have be different at all. There is a big difference going from a desktop/laptop with a mouse and no touch screen, to a phone/tablet with usually no mouse and always a touch screen, but after that, do we really need the distinction? Wouldn't it be better if software (apps and the OS) allowed for a smooth transition across screen sizes from 3" to 10+"?
I personally want a phone in the current dead zone (except for the Dell Streak). I find even 4.3" too small, but 7" is too big. 5", or even 5.5" is my sweet spot. What am I supposed to use - Honeycomb?, Gingerbread? Why the hell do I have to make a choice?
Future smart phones are all going high resolution. Anything with a screen size of 4 inches or more is going to have 1280x720, 768, or 800 pixels at a minimum. 1920x1200 will probably push down to 7" devices. Software should be able to handle a range of screen sizes and resolutions and reflow text and icons (and allow lots of configuration to choose font and icon sizes and number of icons) to make working across this range not a big deal.
And another thing, at this point I do expect that some reasonably specified current hardware (single core, 1 GHz, 512 MB RAM, etc.) should be able to be upgraded many years into the future. Sure certain features may have to be disabled, and configuration sliders controlling animation may have to be turned way back, but I don't want the core Android to turn into some behemoth that won't even run on hardware that is a few years old. I'm ready to hop off the iPhone train and a big reason is that Apple screwed my phone (3G) completely with iOS4 and isn't even trying to fix it anymore (no more updates for that phone). I'd rather Google didn't emulate Apple on that front also.
I'm all for Google flexing some muscle against manufactures and carriers, both of which disappoint me orders of magnitude more than Google ever has. But a sufficient solution for me to the fragmentation problem is if they would push for a lot more Nexus phones and tablets available simultaneously. Just one phone at a time (and no tablets) isn't cutting it. At least one phone from each manufacturer on each carrier and a bunch of tablets would be more like it.