Let me qualify my statements by making it clear I am speaking from experience. I have an iPad, which sits largely unused since I bought the Galaxy Tab from Sprint. The Tab has become my go-to mobile device and is used more than any mobile device in Mobile News Manor. So why won't a bigger Tab compete with the iPad? Size.
The 7-inch form of the Galaxy Tab is the sole reason it has replaced the iPad for me. Sure the Tab does everything I want to do with a tablet, but it is the more portable (and comfortable) size of the Tab that displaces the iPad for me. If the Galaxy Tab was as big as the iPad, I would almost certainly use Apple's slate. I would probably not own the Tab as the iPad interface is smoother and the app selection is bigger than that of the Tab.
Samsung needs to understand that based on my experience with both tablets, the Tab's only advantage over the iPad is the smaller form factor. Price is not that big a factor as both are similarly priced, and having a Wi-Fi only model is an advantage of the iPad over the Galaxy Tab that requires a data contract to get the best pricing.
I love my Galaxy Tab and it is not uncommon to see me with it in my hand at any given moment. That is strictly due to the convenient size the 7-inch form brings to the experience. If the Tab had the same form as the iPad, I would almost certainly still be using the iPad.