Tablets are really good for people who are pc illiterate, and don't really have a need for much of anything else other than surfing the web and reading e-mail, and watching movies online (netflix, etc...)
I consider myself to be very computer literate and I have the "iPad 3". After I jailbroke it I have been able to use it for many administrative purposes. I can access any fileshare on my network remotely and have full remote desktop functionality. I have total access to the filesystem with multiple management apps to fit each situation. I have a terminal that I can run any Linux commands I feel like. I can also hook my iPad up to my TV/projector for presentations. I could go on and on but I think you get the point.
Can tablets replace laptops/desktops? In short, no. But its like asking, "Does a motorcycle replace a truck?" They basically both have the same core functionaility but each have their own perks.
Yes of course these are the obvious uses; Internet, videos, pictures, and books. But iOS has a lot of pretty good apps (far superior than the android market) that really are just fun. Additionally, a bigger screen, better hand gestures are major benefits over handhelds. The #1 use of the iPad for me though personally is learning with all the free educational apps available.
If a your only experience is with low end Android tablets your perspective is limited and does not equate to the experience an iOS tablet provides. Android is a great system but unfortunately it falls victim to the same dilemma Linux and Apple have with desktop systems; that is, the majority of developers make software for Windows. In contrast, most developers make applications for iOS, and it shows.
iPads are just fun. It really is as simple as that. Glorified phones? Maybe, but there are a lot of apps for the iPad that simply don't exist on iPhone/Android. The apps also have different layouts that make a much better user experience than small handhelds. But the bottom line is: I own just about every kind of device that exists and the "iPad 3" is hands down the coolest, most enjoyable device I have ever used.