Wow, a blatant troll at +3 insightful. Well, I suppose it only takes a handful of mods.
1. There is nothing sexy about a crippled CPU with no connectivity.
There is something intriguing, and perhaps sexy from the right viewpoint, about a device that responds instantly and smoothly to your input, and which has consumer-level (finished) applications that look gorgeous. A device that was nothing but "shiny" would have no, or few, practical applications, and any consumer level app is or can be considered a "practical application"--it's something you would pay money to do, use, or have. Or, well, not any, I guess, but I think the size of the market supposes pretty clearly, if only by sheer virtue of statistics, that there are in fact practical applications for it.
2. People can't handle choices. If you give them a device with only a few buttons, then it's like a microwave and they're happy.
I disagree with your oversimplification. A platform like Windows or Linux allows anyone who develops applications to say, "You need to be this geeky to install and use this application." This is by far one of the most straightforward, and yet it is somehow one of the most hotly debated, reversals of the iOS: they do not allow you to jump through hoops in order to get extra functionality, which means that the programmers either have to begrudgingly improve their GUI skills or limit functionality altogether.
The reason is simple--the people they're marketing to will go cross-eyed if you talk to them about a topic they would need to study for months or years to understand at the same level you would, and believe it or not, computers and programming are such a topic. If your life is already computer-centric, understanding computers is no big deal. If your life is centered around construction work, business deals, hair salons, clothing design, or any of the other (completely fucking legitimate) career paths out there, saying "You have to spend months learning computers before this $500 tablet and this particular $2 application become useful to you" is going to lose you customers.
If instead you tell those same customers, "We promise we won't let the programmers do anything that's going to confuse the crap out of you, for instance, try this $2 app that you can start using right away! And there are more that are just as easy!" you now have a customer, and probably more on the way
I mean, in some ways I feel you. I've been a computer user literally longer than I can remember, and the idea of having a tablet that can also have cron jobs and shell scripts running in the background is delicious. But no, dude, don't yell at the Norms for being Normal. Give it a year or two and there will be some kind of really excellent Linux tablet that does everything a geek could ever want. You don't have to try to turn this one into that miracle product. Just let it be.