There's plenty of utility in a tablet. The problem with the current low cost ones is they suck as devices. The N7 is the first relatively low cost device to change that (plus having JB). A $99 N7 would basically take off.
If it's from a well known brands I am SURE they would do a lot better - heck even Binatone (and low rate cordless phone manufacturer) was able to shift a good number of their android 'ebook reader' (I got one for £30 from ebay, OK for reading books on the tube, not for much else).
So once someone like Google, Asus or Samsung sell a well made unit that stands up to the test of daily family use, then these things ae going to fly.
99% of what I do at home with a laptop (or ipod touch) is basic consumption. These will be a welcome replacement for many users.