1. People are not interested in reading anymore
2. Any PC, heck smartphone can get all the news you want. I have at least 200 RSS feeds currently!
3. The content is just not there. Why buy a magazine for things you read about a month earlier online?
To your point: 1) People are reading now more than ever, they just aren't reading books, magazines and newspapers they are online reading blogs, links, articles and chat room transcripts. A tablet enables the old format of reading a book or a magazine to merge with the digital medium. Imagine a magazine that you "read" on a tablet but where the images can be tapped to play video, the links expand to side stories, the "pages" slide and swipe across the display as the "reading" process commences. Apple sees an opportunity here to do exactly what they did for music, provide the music producers a place to showcase their "traditional" media at a price that people were willing to play for because of the scope of offerings and the convenience of access. This is exactly what the Istore did with mp3's which had begun to seriously eat into industry profits but now thanks to the Istore have allowed many companies to eek out an existence over going extinct.
To point 2) You can sit for an hour reading things on your smart phone? Would you want to? For the smart phones with pinch and zoom (like the Iphone) the process of constantly sliding the screen to read the text at the desired size is annoying and battery life suffers. People find the convenience of being able to access the web or read documents on a smart fun awesome, it's a huge advantage over how it was a few years ago with WAP phones but it is still not mated to how people like to "read" real content...a tablet will firmly merge the two worlds and there is definitely a niche for it.
To point 3) The internet is there, the tablets wlll access it...instant content! The new ways of displaying existing magazines to take advantage of the new format will happen very quickly...in fact I've already seen models of digital magazine reading paradigms (there is a youtube video of one that was going around last week I'll post if i find it)...in the mean time the tablet is going to be perfect for doing all the normal things you do with your laptop. Surfing the web, navigating, playing games (it will really open a new class of games that expand on what you can do with a Ipod touch game).
To your question "why buy a magazine for things yo uread about a month earlier online?" I respond with another also asked before the Ipod.
"Why buy mp3's when I can download them free from napster, bit torrent, aries or a bunch of other free ware sites?"
The answer: convenience and if the price is right people will pay a non zero price to get that convenience. Apple realized this with their .99 price point for mp3's and that brilliance enabled the later success of the Iphone. You have to look at this progression in their choices....
Now one more thing on how the time for this technology is now, though the first pads to come will surely be LED backed LCD displays we are on the verge of a MASSIVE change over to the most advanced display technology ever, OLED. The OLED ramp up is being initiated in force by all the major semiconductor and panel makers because of how game changing the technology is on the performance, life time, form factor, efficiency fronts. Starting pad development now enables Apple to be in line for a gen 2 or 3 device with a nice bright OLED screen , the space taken up by the current LED backed LCD's as thin as they are is going to be several times more than that used in a brighter, bigger , more dynamic and energy efficient OLED. The savings in production costs can then go into packing beefier processors while still realizing insane battery life, it will also enable packing the kitchen sink into the pad, GPS, accelerometer, IR...all things I'd want in a pad especially if it could give me 10 hours of continuous use and would not fatigue my arm while carrying it about (every where!).
In 5 years these pads are going to be everywhere and laptops will be the rare beast, remember you read it here first. ;)