When Steve Jobs whipped out the iPad, the first thing I did was do a double-take on the screen's 4:3 aspect ratio. At 1024x763 it's what I used to have on my 2005 Windows XP CRT screen. It's wide. It's iPod "phatty" nano G3 [Wikipedia link] wide and that design only lasted 1 generation before Apple back-peddled to the long and slim. Apple used to default to 16:10, and the new iMac is 16:9, which is modern HDTV aspect ratio. (The iPhone and iPod touch are 3x2)
At 4x3 the iPad will require the same monstrous letterboxing on videos that old SD TVs required. (TUAW has a great post up on this). So what's the deal?
First, unlike a TV where you sit across the room and the screen fills a relatively small part of your field of vision, like the iPhone, the iPad will be held much closer. Even with monstrous letterboxing, the video will still fill a large part of your field of vision.
Of course, the iPad isn't only a video player. There are other forms of content to consume. For web browsing, even 16:10 sometimes feels too "short", and you need to scroll more than you like. For books, a narrow page may not be ideal, and with a two-page spread, those pages will seem squat, squarish.
Now don't get us wrong, if Apple added pixels and made it 16:10 (1280x800), TiPb wouldn't complain (they could pillarbox the books!). If they took pixels away to make it 16:9 (1024x576), it might lose part of that "big screen iPod touch" infamy. And it might lose functionality for anything other than video.
It's definitely a compromise, but is it a good one?
[Thanks Antony for bringing the counter-argument to our attention!]