He meant UX and feature-wise capable, not hardware-wise.
He's right, if the OS itself was more advanced, than even if the same people who own iPads now wouldn't be interested in using those features other than their regular media consumption, it would still open up a new market for the iPad (new target audience). But with its current limitations, it can't do that.
Only reason I would upgrade is if I break it (unlikely as I don't take it outside very often) or when iOS upgrades stop (which is what happened to two previous iPads I have in a drawer somewhere).