As an owner of a Kindle Fire (coming up on one month) who went into it eyes open knowing it wasn't a fully fledged Android tablet and was more of an in-between product between a e-reader and a full tablet, I don't know that I want a larger form factor. I've also got a Samsung slate (one of the devices MS gave out at their Build event, although I didn't get it from that event). I find the larger tablet is not conducive to using it very long. You want to hold it so that you don't get neck strain from looking down at it (like you would have to do if it was sitting flat on your lap). But it gets tiresome holding the larger devices. So you prop your legs up on an angle and place it on your lap. That gets tiresome too. I actually find now that I have the Fire I don't use the Samsung anymore at all. For light web browsing the Kindle Fire does fine and its form factor is much easier to deal with ergonomically. I went into it thinking that I would probably be happier with the 7' form factor (after using the Samsung device for a few months) and I now know I was right - the Fire is a lot better to hold and use.
Now, what would I want in a next generation device from Amazon? I know it would cost more - and I am fine with that - but add more storage, a front facing camera (I don't need a rear facing one in a device of this size), the Google apps and the Google Market, a GPS - boom, the perfect slate form factor table. Oh, and don't lock it. Provide updates quickly and for 2 years - unlike Motorola, HTC, etc. who don't seem to want to support their phones for more than 6 months.