If you stay with the SGP line, you're staying with Gingerbread. That's the BIG downside. Pretty soon we're going to find that some apps will not run correctly (or at all) on GB. (I've already come across a photo-editing app that would not run on GB)
And yes, for some reason, none of the major manufacturers are making a wifi-only device in the 5-6" range. You get a 7" tablet or you get a phone. Too big or too expensive...take your pick.
My plan at this point is to wait until the price of SG Note 2 drops a bit more and pick up one of those. International unlocked 16 gB versions is about $560 right now. (Unlocked/no contract) By summer when the Note 3 is around the corner, that will be sub $500 and I'll bite. The plus side is that it will be ICS and upgradable when Sammy issues the OTA updates. Could just run this on wifi only but buying unlocked allows me to go over to Straight Talk and get "unlimited" data, phone and texts for $45/month. I'll finally ditch my old GSM Razr phone.
Although the Note 2 is still considered a very high-spec device, the one thing that I will truly miss is stereo speakers for listening to music, video and Netflix. Don't know why HTC is the only ONE to get stereo, forward-facing speakers on a device.