The tablet controller is going to be a giant pain in the ass to use. Having two screens more or less worked on the DS, where there's a constant spatial relationship between the two, but when you're going to have to keep your eyes on both the screen in your hands and the screen across the room, it's going to get old
really fast. It's too big, as well - remember how people hated the original XBox controller? A game controller just should not be that large.
That's not to say it won't be a decent system - the Wii defied expectations by actually having some good games that ignored the stupid gimmick hardware and just focused on being fun to play, and there's no reason that couldn't happen here. But if it is a success, it's not going to be because some stuck an iPad in the middle of an ordinary gamepad.
Might need to get an old Dreamcast off eBay and find out what all the fuss was about! Am I right in thinking that the DC wasn't really very successful?
The Dreamcast was quite successful - for the very short period in between its release and the announcement of the PS2. (And like the TurboGrafx/PC-Engine, it was far more popular in Japan, and lasted far longer there than in the international market.) It's not at all a bad system, and has a lot of solid ports and some great exclusives. Definitely worth nabbing one on the cheap.