The iPad 2 came out and the world, other than Apple Fanboyz, let out a collective yawn. Apparently it's thinner and now has two crappy cameras instead of one. So go out and buy one and sell me your "old" iPad for $50. Everybody wins.
A Next-Gen Car Stereo
Most car stereos I see are pretty much the same. Little LCD panel, bunch of poorly named knobs and buttons, etc. Some have nifty features, but nothing tremendously different than it was 10 years ago. Couldn't Apple come up with something that looked better and did more? Maybe with 4G built in?
A Brilliant Clock Radio
I have a pretty awesome clock radio (it's this one here). I can set two different wake times (one for me and one for my wife) each day and they can be different depending on the day. It works great but it's a real pain in the ass to set up and work with. Plus, it's nicer-looking than most clock radios, but I wouldn't consider it stylish. I would think Apple could design a brilliant clock radio. Something like the Sony Dash but cooler.
A Watch I Don't Mind Wearing
I stopped wearing watches many years back. Mostly because I don't like the feel of a watch, but also because it really doesn't offer much. I think most people just use their phones to tell time these days, unless they just like to wear watches. I suspect Apple could give people a reason to wear watches again. Something that looked slick and did things other than telling time. Maybe reading your vital signs or generating power kinetically for your other devices.
A New Instrument
When was the last time someone created a new, game-changing instrument? Something you could grab as easily as a guitar to take on stage and make sounds never heard before? Sure, you could hook up a laptop to some speakers, but a laptop is inelegant and difficult to play. Imagine some white glowing tube with a few mysterious buttons or panels that sounded like whale songs or an underwater banjo.
An Amazing Educational Toy
Leapfrog makes some cool educational toys, as do other toy makers. But I haven't seen anything game changing in kids toys in a while. What if Apple put its brains behind a simple, effective educational toy that first and second grade kids could use at home and at school? Something that wasn't a computer I mean. Something devoid of a computer's distractions but rich in interactivity and education. Something that could be wirelessly updated by the teacher at the end of the day for homework. I don't know what it is, but it would be a great legacy for Steve Jobs.