it definitely has potential for in car entertainment.
It would take considerable amount of work to get it to seamlessly work as your headunit though. Fitting it in the dash wouldn't be impossible. people have fit up to a 10 inch screen I believe with a little fiberglass work. Just having it control everything else would be the hard part.
Now is the time for them to team up with one of the big aftermarket deck manufacturers (alpine, pioneer, or kenwood) and make a decent double din unit for a change. I'm still not impressed with any of their offerings on the market right now, and the features that the ipad have added to a solid unit would be an amazing headunit.
On the otherhand, I wouldn't be surprised to see some sort of an overhead dock so you could use it for the kiddies in back. Heck we just got an overhead unit at work with a built in PS2.