I do see some problem with Apple's current high end pricing model going forward.
* As some people have pointed out the build quality is very good and even an old Ipad 1 can do as much as a new low end cheap tablet, the bad points for Apple don't sell the old ipad 1's anymore and where they do sell the older Ipad 2 its twice the price of these lower priced tablets. So people wanting to save money are either going to buy a second hand ipad or a cheap Android tablet, neither of which make Apple any money. (except perhaps a few pounds on app sales on a second hand ipad)
* There is going to become a saturation point with tablets just as there has become one with PCs and laptops, sure some people will always want shiney shiney but others will be happy to stick with their ipad 1 or 2 unless it breaks especially with prices of £400+ to get a new ipad
* Apple have no low end range to compete with the cheap Android tablets and this will become a problem in emerging markets like India and China where £400 for an iPad is over a months wage for most people so a tablet at £100 is a lot better option in those market, and once they have become used to using Android they are more likely to stick with it on their next device.
As others have pointed out a low end range does dilute the Apple brand some what so perhaps they should consider releasing iOS devices but not branded as Apple, perhaps they could resurrect the Newton brand for the low end devices?