The iPad has a screen size of 9.7", while a slew of iPad competitors are emerging with a screen size of 7". Here is one good reason why you may want to consider the larger screen size: you are likely to run into many free ebooks that are only available in pdf format. As you know, pdf is usually in the size of an A4 paper (after all, that is how pdf originated - as an electronic version of the printout from your printer). Naturally, if you try to read pdf on a smaller screen, you will either have to deal with a miniaturized page, or move the enlarged page around to see everything.
However, the 7" or 6" screen size is quite suitable for an e-reader (e.g. the Kindle). That is assuming you are interested to read novels and other regular paperbacks. The smaller screen is lighter and easier to hold and simulates a regular paperback quite well. You might think an A4-size screen would be better if you want to use the e-reader to read a newspaper. That is not quite the case, because an e-newspaper is specially formatted for reading on a small screen, and it is neither like an HTML web page, or a physical newspaper layout.
So there you go; horses for courses.