To me, the big plus with the Nexus 7 will be Jelly Bean with the "Project Butter" improvements. Google finally figured out that instantaneous response to touch is actually important. I finally tried playing with an Ice Cream Sandwich tablet and while it was greatly improved, there were still times that I touched a control and nothing happened for a heartbeat.
$200 for the 7" HD screen and pure Android sounds perfect. I had recommended a Kindle Fire to a coworker a few weeks ago, but now I will tell them to get this instead.
Also, what does this do to iPod Touch sales? Why not get the bigger screen for the same price? This should drive Apple's price point for these "mini-pads" down. If Apple releases a 7" iPod "Caress" they can get away with a Retina display with 16 GB for maybe $300, but they need to be careful about cannibalizing the Next iPad low-end.
Competition; gotta love it!