Portability isn't an issue for me, and I have my old but trusty Zune to use as a media player The reason I'd offer trading up my iPod is that I don't want basically two of the same thing. Since the iPod would help me pay it off, I'd rather trade that sucker in.
Definitely get an iPad! I bought an iPad 3G the day it came out and I don't regret it at all. I love having the option for 3G when I want it. The big screen is so much better than the tiny Touch screen. I hardly ever use my Touch anymore, except as a music player.
Do you plan on using the iPad out in public? I'm too paranoid to bring my anywhere except maybe friends places and hotels during vacations. At home it's a great portable internet. always on device. I'm surprised it's selling so well to be honest because the notion of having another device like that sounds pretty techy/geeky and completely unnecessary. I just love mine for the portable full screen web browsing experience
Some other things to keep in mind: If you don't already have an AT&T contract you are stuck with two 3G options (if you get the 3G). $15/200MB plan or the $25/2GB plan. Unlimited is now gone for those that don't already have contracts. No iOS 4 until the fall 2010. Expect most of your current iPod games to look kind of crummy in 1x mode. So odds are you are going to be shelling out more money for the made for iPad titles if you want made for iPad graphics (HD titles). Magazine subscriptions are not transferable to iPad versions (yet and maybe never). You are paying around $4.99 per issue, yet another chunk of money you will spend if you are into magazines. Not very practical as a music player out of the home. Also while others may disagree portability is a big issue with the iPad. Carrying around an iPod works just about anywhere (because of the size) while carrying a big iPad around doesn't. It just doesn't work all too well when you are out with friends and want to do things because you are holding it all the time. It is much more suited for a stay at home or stay in your hotel room (when traveling) type of device. Unless you like using backpacks while you are out and about this is a big consideration. The positives are larger screen real estate and a very good long lasting battery.
