Actually the linked item is an unlocked phone with a 3.7" screen. The parent comparison is invalid. Gruber is actually comparing it to an unlocked iPhone for $599/$699 as he should be, he is not comparing it to an iPad.
7" vs 10" screens but failedl to mention that the Galaxy Tab also has dual cameras, a GPS chip, a cellular chip, and etc - things not seen on the ipad.
I think the Tab could have been priced lower but Samsung wanted to see if they could technically compete with the ipad at the same price point first. And if things don't go well, reduce the prices later. Why shoot yourself in the foot to begin with?
And additionally when Android lifts the hardware requirement to obtain the Android Market, you will definitely see much cheaper tablets such as Archos and even the Galaxy WiFi Tab.