To be honest I'm not really sure what I'll be using it for yet, I just want a shiny new toy
Not having had an Android product (or really anything app-driven) before, I'm just looking to experiment with everything that's available and possibly take some responsibilities off of my aging laptop.
I know what you mean. I wanted an Android "something" for a long time. Then I picked up one of the first 7" tablets out of China from Pandawill last year for $160. It wasn't bad and it got me into the whole Android thing. t was a little slow, though, although I could do almost everything I wanted to with it.
I then waited for Virgin Mobile to come out with the Motorola Triumph and have been very pleased with it. I paid $250 for the phone and $25 a month for service. The 4.1" screen pretty much took the place of the slower tablet.
Then Pandawill offered a 7" version of my phone (basically same specs) for $105 and I picked it up. I gave the old tablet to my father as an enhanced e-reader and he loves it.
Then my friend picked up a 9.7" tablet by Le Pan from Wal-mart for $197 with basically the same specs as my tablet and he loves it.
That's a good point about the screen size though. I think the portability of a smaller tablet would be a great thing, but I dont feel that there is a sufficiently powerful unit on the market in the smaller sizes.
I don't like carrying items around, so if it can't fit in my pocket it's not going with me.

The power is relative to what you want out of it. I've found that a 1Ghz processor with 512Mb RAM and an ARM7 architecture allow me to do everything I need. I play games (although I'm not a real gamer) stream video, surf the web and use the multitudes of apps without any problem. For me, I don't see a need to upgrade for the next 3-4 years. But that's me. I DID upgrade once I found a 7" tablet I liked and thought would work for a while.
I was actually strongly considering waiting for the Galaxy Tab 7.7 to come out but it looks like that might be delayed by quite a bit in North America. Do you know of any comparable tablets to the Asus in a smaller size that I could research?
All of the better tablets are shipped over here with the higher price tags. Money was a big consideration for me, so dual processors and extra RAM weren't worth me looking into them. Sorry.
Like I mentioned before I'd rather get a more powerful tab with a larger screen than choose a lower end unit solely because of screen size. Besides, if/when I do get a new smartphone, that would make a smaller tablet seem kind of redundant to me. The experience of browsing, playing games, reading ebooks, etc seems far more practical on the larger screen, and I can see myself favoring the tablet over my laptop for basic tasks if the screen doesnt feel too small.
My friend who picked up the 9.7" tablet had a 7" tablet too. When he got his Android phone (a 3.2" Optimus V) he went for the bigger tablet and he's happy to have the two vastly different sizes.
Can you tell I'm kind of lost?
I was burned once with my phone when I bought it and then it was outdated within months, I'd rather that didnt happen with the tab.
I think it all boils down to figuring out what you want to do with your phone/tablet and when you find something that does the job, pick it up. There will always be a newer, better, faster version on the market within 6 months of whenever you buy. But if you research what other people have said about their Androids and keep an eye on what's around the corner, you might be able to find something that will last you for a while. That's what I did and I'm happy with my purchases.